UK inflation rate falls AGAIN hitting lowest level in almost three years – what it means for your money

THE UK's rate of inflation fell again last month, to the lowest level in almost three years.

Consumer Prices Index (CPI) inflation stood at 2.3% in April according to fresh figures from the Office for National Statistics (ONS).

This is down from 3.2% in March and marks the lowest level since July 2021.

The data shows inflation is now closer towards the Bank of England’s 2% target.

Today's figures confirm that inflation is "back to normal" and "brighter days are ahead", Rishi Sunak has said.

It comes just a day after the IMF (International Monetary Fund) upgraded UK growth for this year and forecast the economy will grow faster than any other large European country over the next six years.

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Inflation is a measure of how much the prices of everyday goods like food and clothes, and services like train tickets and haircuts, are now compared to a year earlier.

It's important to note that when inflation drops it doesn't mean that prices have stopped rising, it just means they are doing so at a slower pace.

Reacting to the latest inflation figures, a Treasury spokesperson said: "We rightly protected millions of jobs during Covid and paid half of people’s energy bills after Putin’s invasion of Ukraine sent bills skyrocketing – but it wouldn’t be fair to leave future generations to pick up the tab.

"That’s why we must stick to the plan to get debt falling. The economy is turning a corner, with strong growth this quarter and inflation close to target, allowing us to cut taxes for the average worker by £900 a year."

What is the Bank of England base rate and how does it affect me?

Falling inflation offers some hope to mortgage holders and prospective buyers, who will be hoping for interest rate cuts.

But pressure is now on the BoE to reduce interest rates which are still at a 16-year high of 5.25%.

To do so it will be looking for signs that services inflation has weakened.

The BoE is due to meet again to assess interest rates on June 20.

ONS chief economist Grant Fitzner said: "There was another large fall in annual inflation led by lower electricity and gas prices, due to the reduction in the Ofgem energy price cap.

"Tobacco prices also helped pull down the rate, with no duty changes announced in the budget."

Meanwhile food price inflation saw further falls over the year, although these were partially offset by a small uptick in petrol prices.

CPI food inflation edged down to 2.9% in April from 4% in March – much lower than its peak of almost 20% in the spring of 2023.

What it means for your money

Cooling inflation is good news for household budgets, and for those hoping for a summer mortgage rate cut.

Alice Haine, personal finance analyst at Bestinvest, said: "Easing inflation will be welcomed by households across the nation as incomes can now stretch further than they did a year ago, offering some much-needed respite from the barrage of rising bills of recent times.

"Remember, however, prices are still rising, they are just going up at a much slower pace than they were."

The outlook for household finances "certainly appears rosier" after a challenging few years, Ms Haine added.

She said: "Consumers should not see this as a signal to splash the cash, however.

"Even if the hoped-for rate cut does materialise next month, borrowing costs remain high, so those with lingering
financial concerns should remain cautious for now."