Helena Lyng Blak
3 weeks ago

UK Inflation Nears 2% Target

UK inflation edges closer to target, sparking rate cut speculation.
5 British pounds bills printed in illegal money production conveyor. Collage of many fake bills. Concept of counterfeitters mass work — Photo by Mehaniq
5 British pounds bills printed in illegal money production conveyor. Collage of many fake bills. Concept of counterfeitters mass work — Photo by Mehaniq

On Wednesday, May 22, 2024, the United Kingdom Office for National Statistics (ONS) released its April consumer price inflation report, revealing a slight disappointment but overall positive trends in decreasing inflation.

The Consumer Prices Index (CPI) for the 12 months to April rose by 2.3%, which was down 0.9% from 3.2% in March.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.0%, down from March’s 3.8%.

On a monthly basis, the CPI rose by 0.3% in April 2024 compared to April 2023’s significantly higher surge of 1.2%.

The CPIH in April 2024 rose by 0.5%. The CPIH also rose by 1.2% in April 2023. 

According to the New York Times, the Bank of England (BoE), the UK’s central bank, had expected inflation to decrease all the way down to 2.1%, putting the actual rate of 2.3% faintly above expectations.

It is nevertheless an additional signal that the British economy is moving in the right direction, following the country’s brief stint in recession earlier this year. 

As the UK inflation rate nears its 2% target, it is furthermore bound to fuel rate cut talks, but with Sunak calling an election on Wednesday afternoon, rate cuts this summer seems increasingly unlikely. 

In Europe, European Central Bank President Christine Lagarde has strongly signaled rate cuts as early as June, should inflation rates meet targets as expected, Bloomberg reports. 

Meanwhile, in the United States, however, inflation remains stubbornly high at 3.4%, dampening the chances of rate cuts by the US Federal Reserve Board. 

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