Inflation has met the Bank of England's (BoE) target for the first time in nearly three years, with prices rising 2% in the year to May, down from 2.3% in April. This comes as the general election on 4 July approaches, with parties debating how to manage the cost of living.
May's lower inflation was due to slight drops in food and soft drink prices, and slower price increases for recreation, culture, and household goods.
Prices for bread, cereals, vegetables, sugar, jam, and chocolate fell between April and May. However, food prices remain 25% higher than at the start of 2022. Petrol prices rose by 0.7p per litre, while diesel prices fell by 0.8p per litre.
The BoE is expected to maintain the interest rate at 5.25%, a 16-year high, for the seventh consecutive meeting. Market expectations for a rate cut in August have diminished due to persistent high price rises in the services sector, at 5.7% over the year to May. Inflation has steadily decreased since peaking at 11.1% in October 2022.
Despite falling inflation, millions of households continue to struggle with the cost of living. Lower inflation rates mean prices are rising slower, not decreasing. The BoE's interest rate hikes aim to curb consumer demand, increasing mortgage rates and rents.
Official figures show that average rents paid to private landlords rose by 8.7% in the year to June. Mortgage rates remain high as lenders await the BoE's next interest rate decision.
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