British inflation falls to lowest level in nearly three years, but still above Bank of England’s target

A customer carries a basket filled with food inside a Sainsbury’s supermarket, in Richmond, West London, Britain, on Feb. 21. Inflation in the U.K. fell sharply to its lowest level in nearly three years in April on the back of big declines in domestic bills, official figures showed Wednesday.

The next rate meeting is on June 20 and many economists think the bank will cut borrowing costs. However, others think that ongoing concerns on the panel over the scale of price rises in the crucial services sector and the pace of wage increases, which raise the risks of an inflation rebound if interest rates are cut too soon, make an August reduction more likely.

Inflation hit a high above 11 per cent at the end of 2022 in the wake of Russia’s invasion of Ukraine, which led to sharp increases in energy costs. Higher interest rates – which cool the economy by making it more expensive to borrow, thereby bearing down on spending – have contributed to bringing down inflation worldwide. Figures last week showed that the British economy has started growing again.

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