UK inflation expected to drop to 2% in May, meeting official target for first time since 2021.

From Morningstar: 2024-06-17 04:58:00

UK inflation figures for May are highly anticipated, with the CPI data release expected to show a decrease to 2% from 2.3% in April. This marks the first time inflation has hit the official target since July 2021, following a three-year period of varying rates.

The upcoming General Election on July 4 makes this data release crucial, as the Conservative party is campaigning on bringing inflation back to target. If inflation does drop to 2%, pressure may mount on the Bank of England to lower rates from 5.25%, although this is unlikely at the June 20 meeting.

In the UK, April’s CPI was 2.3%, higher than the forecasted 2.1%, showcasing an unpredictable route towards the target. Energy price fluctuations drove the drop from a previous 2.6%, with a slow-down in food and drink price hikes compared to 2023. However, core CPI remains a concern at 3.9%, higher than the headline rate.



Read more at Morningstar: UK Inflation: What to Expect from May’s Data