The Prime Minister has declared that the Tories have reached the 2% target for inflation for the first time in three years.
Rishi Sunak has said this is “great news” which proves the economy has turned a corner which is a symbolic moment.
Official figures shows that Consumer Prices Index (CPI) inflation has fallen to 2% in May compared to 2.3% in April.
Sunak told LBC Radio, “It’s very good news because the last few years have been really tough for everybody … But we’ve stuck to a plan, we’ve taken the action needed, it wasn’t always easy, but we’ve got there, and inflation is back to target.”
Chancellor Jeremy Hunt said, “Now we have inflation down, taxes starting to come down and, hopefully soon, mortgages coming down as well.”
However, Victoria Clarke, UK chief economist at Santander corporate investment Bank, said: “We do not expect the Bank to cut rates tomorrow.
“Our base case has been for an August cut, but this will be reliant on these broader signals continuing to decisively soften over the next month’s data.
“As such, a risk of a later than August move is there, after today’s services print.”
Peter Arnold at the EY Item Club said, “There’s a good chance the first rate cut will come in August, but the language of tomorrow’s MPC minutes will be an important guide.”
The Shadow Chancellor Rachel Reeves said, “After 14 years of economic chaos under the Conservatives, working people are worse off.
“Prices have risen in the shops, mortgage bills are higher and taxes are at a 70-year high.”
Liberal Democrat Treasury spokeswoman Sarah Olney said, “The hard truth is that millions of people won’t be feeling any better off today.”
