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19/06/24
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British Inflation Drops Back to BoE’s Target
Data on Wednesday showed that British inflation dropped back to the Bank of England’s target for the first time in close to 3 years, increasing hopes that the central bank will start cutting interest rates soon.
The consumer price index in the UK in the 12 months to May rose by 2.0% on an annual basis, as expected, down from April’s 2.3% – the slowest increase since Jul. 2021.
Last month, the CPI rose by 0.3% on a monthly basis, lower than the 0.4% expected, and the same as the prior month’s gain.
According to the Office for National Statistics, the biggest downward push to the change was from food, as prices fell this year but rose a year ago, while the biggest upward push came from motor fuels, as prices rose slightly this year but fell a year ago.
Core inflation, excluding volatile energy, food, tobacco, and alcohol prices, dropped from 3.9% to 3.5% on an annual basis, also as expected.
This added to the broader global disinflation picture, after last week’s benign U.S. data, and came after a sustained period of high UK inflation, which in October 2022 peaked at 11.1% – the highest since 1981.
It comes before the BoE’s interest rates decision on Thursday.
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