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UK inflation rate back down to 2%

By EARLE GALE in London | China Daily Global | Updated: 2024-06-20 09:13

FILE PHOTO: A tourist shelters from the rain under an Union Jack umbrella near the Bank of England in the City of London financial district in London, Britain, February 13, 2024. [Photo/Agencies]

The United Kingdom's ruling Conservative Party got some rare good news on Wednesday, when the country's inflation rate eased back down to the Bank of England's 2 percent target during the year ending May, after having been 2.3 percent in April and after having peaked at 11.1 percent in October 2022.

With the party a distant second to the opposition Labour Party in opinion polls ahead of the July 4 general election, the news was welcomed by Prime Minister Rishi Sunak, who has always said past high rates of inflation were down to more expensive food and fuel attributed to the Russia-Ukraine conflict, and the legacy of the COVID-19 pandemic.

The fact that the rate has returned to the 2 percent target for the first time in almost three years was welcomed by the UK's finance minister, Chancellor of the Exchequer Jeremy Hunt, who said it shows the Conservative Party can be trusted with the country's economy, which experienced a "soft landing with inflation that was higher than nearly any other major economy now lower than nearly all our major competitors".

"That would not have happened under Labour, that refused to condemn the public-sector pay strikes, that would have meant inflationary pay rises, inflation lasting longer," the BBC quoted him as saying.

The Bank of England will meet on Thursday to decide whether to cut its key interest rate, which, at 5.25 percent, is the highest it has been for 16 years.

However, the country' central bank is not expected to make a cut because it rarely makes big decisions during election campaigns for fear of influencing voters.

Nevertheless, the prospect of impending rate cuts and, therefore, cheaper mortgages and loans will be welcomed by Britons, who have endured a cost-of-living crisis in which prices have gone up far faster than wages.

But the Labour Party's shadow chancellor, Rachel Reeves, said the fall in inflation will have done little to ease the pressure many people are under.

"Unlike Conservative ministers, I'm not going to claim that everything is all fine, that the cost-of-living crisis is over, because I know that pressures on family finances are still acute," she said.

Sarah Olney, the economy spokesperson for the country's third-largest party, the Liberal Democrats, agreed, saying "millions of people won't be feeling any better off today, thanks to years of Conservative economic mismanagement".

The Office for National Statistics, which calculates the UK's inflation rate, said the fall was largely down to slower price rises for food and drinks, recreation and culture, and furniture and household goods.

The UK's inflation rate is now lower than the rate in the eurozone, which was 2.6 percent in May, and the United States, which saw inflation running at 3.3 percent during the same period.

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