LONDON: British inflation returned to its 2% target in May for the first time in nearly three years, official figures showed on Wednesday, as the economic effect of the COVID-19 pandemic and Russia's full-scale invasion of Ukraine faded. The drop in annual consumer price inflation from April's 2.3% reading was in line with economists' median expectation in a Reuters poll and marks a sharp decline from the 41-year high of 11.1% reached in October 2022. The fall has been sharper than in the euro zone or the United States, where consumer price inflation in May was 2.6% and 3.3% respectively, belying concerns a year ago that British inflation was proving unusually sticky. The BoE has said a return of inflation to its target is not enough on its own for it to start cutting interest rates. The most recent fall in inflation was driven by a cut in regulated household energy bills in April - the effect of which will fade later in the year, when the BoE forecasts inflation will rise again.

Source: The Star June 19, 2024 10:48 UTC