Skip to content
Search

Latest Stories

Inflation returns to two per cent target for first time since 2021

The decline in inflation in the UK has been sharper than in the eurozone or the United States.

Inflation returns to two per cent target for first time since 2021

UK inflation reached its 2 per cent target in May for the first time in nearly three years, data showed on Wednesday. Despite this, underlying price pressures remained strong, suggesting the Bank of England might delay cutting interest rates.

The reduction in headline inflation in May will be seen as positive by prime minister Rishi Sunak and the Bank of England (BoE). However, it may not be enough to improve Sunak's position for next month's election or prompt a BoE rate cut on Thursday.


The data indicated services price inflation, which the BoE views as a key indicator of medium-term inflation risks, was at 5.7 per cent. This was a slight decrease from 5.9 per cent in April but did not meet economists' expectations of 5.5 per cent.

The British pound rose slightly against the US dollar following the data release.

"Rate-setters will still need to weigh the fall in headline inflation against signs that domestic price pressures, such as elevated pay growth, are proving slower to come down," said Martin Sartorius, principal economist at the Confederation of British Industry, predicting a first rate cut in August.

Annual consumer price inflation dropped from 2.3 per cent in April, aligning with economists' expectations in a Reuters poll. This marks a significant decline from the 41-year high of 11.1 per cent in October 2022.

The decline in inflation in the UK has been sharper than in the eurozone or the United States, where consumer price inflation in May was 2.6 per cent and 3.3 per cent respectively. This contrasts with concerns a year ago that British inflation was unusually persistent.

Despite the fall, consumer prices have risen around 20 per cent over the past three years, impacting living standards and contributing to the unpopularity of Sunak's Conservatives, who trail the opposition Labour Party by about 20 points in opinion polls.

The BoE has stated that the return of inflation to its target is not enough to begin cutting interest rates.

While most economists polled by Reuters expect a rate cut from the current 5.25 per cent in August, financial markets predict the first move more likely in September or October, with just a 10 per cent chance of a cut this week.

The recent drop in inflation was driven by a reduction in regulated household energy bills in April, an effect expected to diminish later in the year, when the BoE forecasts inflation will rise again.

(Reuters)

More For You

marks & spencer

M&S has confirmed that its physical stores remain open and operational

Getty

Marks & Spencer suspends online shopping after cyber attack hits systems

Marks & Spencer (M&S) has paused all online orders following a significant cyber attack that has left the company working to restore its systems. The retailer confirmed the cyber incident earlier this week, after customers began experiencing issues with online services last weekend.

While some systems have been brought back online, others remain offline, forcing M&S to stop taking orders through its website and apps. This includes both food deliveries and clothing purchases. The company issued an apology for the inconvenience, acknowledging the disruption and stating that its team, supported by cyber experts, is working tirelessly to resolve the situation.

Keep ReadingShow less
Pakistan airspace curbs push up costs for Indian airlines

FILE PHOTO: Passengers stand in a queue before entering the Chhatrapati Shivaji Maharaj International Airport in Mumbai. (Photo by SUJIT JAISWAL/AFP via Getty Images)

Pakistan airspace curbs push up costs for Indian airlines

TOP Indian airlines Air India and IndiGo are bracing for higher fuel costs and longer journey times as they reroute international flights after Pakistan shut its airspace to them amid escalating tensions over a deadly militant attack in Kashmir.

India has said there were Pakistani elements in Tuesday's (22) attack in which gunmen shot and killed 26 men in a meadow in the Pahalgam area of Indian Kashmir. Pakistan has denied any involvement.

Keep ReadingShow less
Campbell Wilson

Air India CEO Campbell Wilson steps down as Air India Express chair

Air India CEO Campbell Wilson steps down as Air India Express chair

AIR INDIA CEO Campbell Wilson is stepping down as chair of Air India Express, the airline’s low-cost subsidiary. He will be replaced by Nipun Aggarwal, Air India’s chief commercial officer, according to an internal memo sent on Tuesday.

Wilson will also step down from the board of Air India Express. Basil Kwauk, Air India’s chief operating officer, will take his place.

Keep ReadingShow less
Air India eyes Boeing jets rejected by Chinese airlines: report

Tata-owned Air India is interested in purchasing jets that Chinese carriers can no longer accept (Photo credit: Air India)

Air India eyes Boeing jets rejected by Chinese airlines: report

AIR INDIA is seeking to acquire Boeing aircrafts originally destined for Chinese airlines, as escalating tariffs between Washington and Beijing disrupt planned deliveries, reported The Times.

The Tata-owned airline, currently working on its revival strategy, is interested in purchasing jets that Chinese carriers can no longer accept due to the recent trade dispute. According to reports, Tata is also keen to secure future delivery slots should they become available.

Keep ReadingShow less
Infosys forecasts lower annual growth after Trump tariffs cause global uncertainty

The IT service firm said its revenue would either stay flat or grow by up to three per cent

Getty Images

Infosys forecasts lower annual growth after Trump tariffs cause global uncertainty

INDIAN tech giant Infosys forecast muted annual revenue growth last Thursday (17) in an outlook that suggests clients might curtail tech spending because of growing global uncertainty.

The IT service firm said its revenue would either stay flat or grow by up to three per cent in the fiscal year through March 2026 on a constant currency basis. The sales forecast was lower than the 4.2 per cent constantcurrency revenue growth Infosys recorded in the previous financial year.

Keep ReadingShow less