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British inflation back to 2%

FILE PHOTO: A tourist takes shelter from the rain under a Union Jack umbrella at the Bank of England in the financial district of the City of London in London, Great Britain, February 13, 2024. (Photo/Agencies)

Britain’s ruling Conservative Party received some rare good news on Wednesday, as the country’s inflation rate for the year ending May fell back to the Bank of England’s 2 percent target after being 2.3 percent in April and having reached a peak of 11.1 percent. in October 2022.

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

The fact that interest rates have returned to the 2 percent target for the first time in almost three years was welcomed by the UK Chancellor of the Exchequer, Chancellor Jeremy Hunt, who said it shows the Conservative Party can be trusted with the economy of the country. which made a “soft landing with inflation that was higher than that of almost every other major economy and is now lower than that of almost all of our major competitors”.

“That wouldn’t have happened under Labour, which refused to condemn public sector pay strikes, which would have meant inflationary pay rises and prolonging inflation,” the BBC quoted him as saying.

The Bank of England meets on Thursday to decide whether to cut its key interest rate, which at 5.25 percent is the highest interest rate in sixteen years.

However, the country’s central bank is not expected to cut spending as it rarely makes major decisions during election campaigns for fear of influencing voters.

Nevertheless, the prospect of impending interest 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 risen much faster than wages.

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

“Unlike Conservative ministers, I am not going to say that everything is fine, that the cost of living crisis is over, because I know that the pressure on family finances is still acute,” she said.

Sarah Olney, economics spokesperson for the country’s third-largest party, the Liberal Democrats, agreed, saying: “Millions of people won’t feel better off today, thanks to years of Conservative economic mismanagement.”

The Office for National Statistics, which calculates inflation in Britain, said the fall was largely due to slower price rises for food and drink, recreation and culture, and furniture and household goods.

British inflation is now lower than that of the eurozone, which stood at 2.6 percent in May, and the United States, where inflation stood at 3.3 percent in the same period.

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