UK achieves inflation target for the first time in 2 years

Posted on June 21, 2024   |  

In May, UK inflation hit its 2% target for the first time in almost 3 years, as the effects of Covid-19 and Russia's invasion of Ukraine diminished.

Annual consumer price inflation fell from 2.3% in April to 2% in May, matching economists' predictions, down from a 41-year high of 11.1% in October 2022.

The UK's inflation drop was steeper than in the eurozone and the US, where May's inflation rates were 2.6% and 3.3%, respectively.

Earlier concerns about persistent UK inflation have eased with this significant decline.

Despite the fall, consumer prices have risen about 20% over the last three years, affecting living standards.

Most economists expect the Bank of England to cut interest rates from the 16-year high of 5.25% in August, though markets anticipate the first cut in September or October.

Financial markets see only a 10% chance of an interest rate cut this week.