Inflation drops to 2%, down to lowest level in three years
Inflation has dropped to 2%, which is the lowest it has been in since July 2021.
Inflation has dropped to the Bank of England's target of 2%, which is the lowest it has been since 2021.
Data from the Office for National Statistics shows rates for May are is down 0.3% from 2.3% in April.
Rates skyrocketed in October 2022 to 11.1%, the highest it had been in decades, following Russia's invasion of Ukraine.
Raj Kandola, director of external affairs at Greater Birmingham Chambers of Commerce, said: “It’s reassuring to see the headline rate of inflation fall to the Bank of England’s target rate for the first time in almost three years.
“Nevertheless, service inflation remains a sticking point, coupled with strong wage growth - all of which makes an imminent interest rate cut unlikely, especially in the midst of a General Election campaign.
“Early analysis from our latest Quarterly Business Report survey underlines the persistent cost pressures local firms continue to face. Whichever party forms the next Government will inherit a challenging fiscal landscape, so reducing cost pressures for businesses and unlocking firm-led investment will need to figure highly in growth plans moving forward.”
The Resolution Foundation think tank, which specialises in living standards, said the Bank of England's concerns about services inflation could give rate-setters "pause for thought" .
James Smith, research director at the Resolution Foundation, said: "While the UK experienced a higher inflation peak during the cost-of-living crisis, it has now got back to target more quickly than either the US or euro area.
"But the legacy of a long period of very high inflation means there is unlikely to be much of a feelgood factor among families, as they continue to struggle with the higher cost of essentials.
"While headline inflation is back to normal levels, domestically-driven services-price inflation remains elevated.
"This inflation will worry the Bank of England and may give pause for thought when it comes to cutting interest rates."
Experts think interest rate cuts could happen in August.