Inflation falls to lowest level in three years

22 May 2024

UK inflation fell to 2.3% in the year to April, according to the Office for National Statistics (ONS).

Inflation is down from 3.2% in March and is the lowest level in almost three years.

However, it is still above the Bank of England's 2% target and higher than the 2.1% forecast by the Bank and other analysts.

The drop was driven by falling gas and electricity prices after the energy price cap was lowered by Ofgem.

The British Chambers of Commerce (BCC) said the fall was positive news that increased the likelihood of an interest rate cut in the coming months.

David Bharier, Head of Research at the BCC, added: 'Uncertainty will persist with global conflicts and trade wars threatening supply chains. Real wage costs also continue to grow – our most recent business survey found almost half of firms expect their prices to rise over the next three months, with labour costs cited as the main driver.

'While the outlook may have brightened, the skies aren't yet fully clear. UK firms need to see a long-term vision for the UK economy from politicians, including action on making trade easier, especially with the EU.'