London: Consumer prices in the UK rose by 2.3% on an annual basis in April, a decrease from the 3.2% increase recorded in March, according to the Office for National Statistics. This marks the lowest reading since July 2021.
The figure was slightly higher than the expected 2.1% annual rate forecasted by the Bank of England and economists surveyed by Reuters.
"Today marks a significant moment for the economy, with inflation returning to normal," said UK Prime Minister Rishi Sunak.
The Bank of England (BOE) has a target of bringing down inflation to 2 per cent. Services inflation, closely monitored by the BOE as an indicator of domestically driven price pressures, slightly exceeded expectations at 5.9%. Both the BOE's projections and the Reuters survey had anticipated a lower reading of 5.5%.
Despite Sunak's emphasis on reducing inflation as a key objective last year, the easing of price pressures has not translated into a boost for the ruling Conservative Party's popularity in polls. Despite positive economic indicators signaling recovery from a mild recession the previous year, the Labour opposition maintains a lead of approximately 20 percentage points.
The BOE has signaled the possibility of lowering interest rates during the upcoming summer if inflationary pressures continue to ease as expected. Market expectations strongly suggest a rate cut by June 20, with near certainty that it will occur by early August.
The Monetary Policy Committee, comprised of nine members, has highlighted the importance of reviewing two sets of inflation and employment data between the May and June meetings to determine if fundamental price pressures have sufficiently alleviated.
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