Inflation rate falls to 2.3%

UK inflation is continuing to come down, dropping to the lowest level in almost three years.

Prices rose at 2.3% in the 12 months to April, down from 3.2% in March, according to the latest monthly report from the Office for National Statistics (ONS).

Although this is well below the recent peak of 11.1% seen in October 2022, the rate is still higher than the Bank of England’s target of 2%. It is also slightly higher than the 2.1% predicted by economists.

Lower gas and electricity prices were the main driver behind the inflation drop in April, after a reduction in the energy price cap set by Ofgem. Energy prices fell by 27.1% in the year to April, the largest fall on record.

Food inflation also continued to ease, with prices of food and non-alcoholic beverages rising by 2.9% in the year to April, down from 4.0% in the year to March. This was the 13th consecutive month of falling food inflation, from the high of 19.2% in March 2023, the highest annual rate for over 45 years.

The Bank of England said earlier in May that it wanted to see “more evidence” that inflation will stay low before deciding to cut interest rates.

Analysts currently expect rates to be held at 5.25% at the next meeting of the Monetary Policy Committee in June, followed by a cut in August.