For the first time in over three years, the price level of inflation has reached the objective set by the Bank of England.
According to official estimates, prices increased by 2% in the year leading up to May, which is a decrease from the 2.3% increase that occurred the previous month.
A significant topic of discussion in the run-up to the general election on July 4 is the economy. All of the major parties are engaged in a fierce debate over the means by which they want to maintain a manageable cost of living.
On the other hand, Labour said that the demands on family budgets were “still acute,” while the Conservatives stated that their “difficult decisions” were working out.
CPI inflation rate
A minor decrease in the costs of food and soft drinks, as well as slower price increases for leisure and culture, as well as furniture and home items, were the primary contributors to the decrease in the inflation number for the month of May.
On the other hand, the cost of gasoline is rising once again, and the cost of food is still 25 percent more than it was at the beginning of 2022.
Before the Bank of England makes its most recent decision on interest rates for the United Kingdom on Thursday, the inflation statistic has been released.
It is anticipated that the bank would maintain the rate at 5.25%, which is a high not seen in sixteen years, for the seventh meeting in a row. There is no expectation of a reduction in the market until August.
At what rate are prices increasing in the United Kingdom?
Since October 2022, when Russia’s invasion of Ukraine led inflation to reach its highest point of 11.1% due to the surge in the cost of food and gasoline, inflation has been slowly declining.
There are still millions of families who are having difficulty keeping up with the expense of living.
Despite the fact that inflation is decreasing, this does not necessarily suggest that prices of goods and services are decreasing overall; rather, it just indicates that they are increasing at a lesser rate.
The Bank of England has also increased interest rates in an effort to reduce the amount of demand from consumers, which has resulted in an increase in both mortgage rates and rentals.
With the publication of official numbers on renting on Wednesday, it was also revealed that the average rentals paid to private landlords in the United Kingdom increased by 8.7% in the year leading up to June.
Despite the fact that the rate of inflation has been decreasing, mortgage rates continue to be stubbornly high. This is because lenders are waiting for the next and future adjustments on interest rates that will be made by the Bank of England.
In an interview with the BBC, Gary Wildman, the proprietor of John Wildman & Sons butchers, said that he had seen a leveling out of price increases at the establishment that he and his father had established in Rustington, West Sussex, thirty-one years ago.
“Prices are probably 10 to 15% more than they were at the beginning of Covid, but they are level now, definitely,” he said to the British television network.
Despite this, he said that the prices of some items, such as pork, continued to rise, and that the shop’s energy expenses were greater than they had been a few years before.
“You do take a hit to your margins,” he said to reporters. “You can’t pass all costs on to customers or the customers wouldn’t come in.”
Fights between parties over the expense of living
The inflation rate for the month of May is the last key official economic number that will be released before the general election, and it has prompted a large controversy among the major parties.
The Conservatives assert that the numbers provide evidence that supports their narrative of a turnaround in the economy; nonetheless, the issue that arises for them politically is whether or not they get any credit for the decline.
The rate of inflation in the United Kingdom is now lower than “nearly all” of the major countries, according to Chancellor Jeremy Hunt.
“That would not have happened under Labour that refused to condemn the public sector pay strikes, that would have meant inflationary pay rises, inflation lasting longer,” according to the politician.
On the other hand, Labour continues to voice its worries on an ongoing issue in the cost of living
Rachel Reeves, the shadow chancellor for Labour, made the following statement: “Unlike Conservative ministers, I’m not going to claim that everything is fine, that the cost of living crisis is over, because I know that pressures on family finances are still acute.”
Senator Sarah Olney, a spokesman for the Liberal Democrats in the Treasury Department, said that millions of people would not be feeling any better.When compared to only a few years ago, the claims of Rishi Sunak will seem hollow to the many families who are seeing the skyrocketing of their mortgages and the agonizing hikes in the cost of buying items.
What is the extent of the price increase for you?
Because of the delay in receiving Child Benefit, I was compelled to visit a food bank. “We budget, but we don’t have enough to cover food.”
The rate of inflation in the United Kingdom is now growing at its weakest level since July 2021.
Additionally, it is lower than the rates that were in place in the eurozone and the United States in May, which were 2.6% and 3.3% respectively.
The United Kingdom, on the other hand, is not yet out of the woods, since price increases in the services sector continue to be rather significant.
According to Yael Selfin, chief economist at KPMG UK, the inflation rate for services is still “uncomfortably high,” and the Bank of England would need to see a continuous decline before it would consider lowering interest rates.
David Bharier, who is the head of research at the British Chambers of Commerce, added “additional weight for an interest rate cut in the coming months” in response to the inflation statistic that was released in May.
