Last month the UK’s rate of inflation fell to a two and a half year low, according to the Consumer Price Index (CPI) and the Office of National Statistics (ONS).
May’s figure reads 2.8%, a fall of 0.2% from the April. In September of last year, the rate was 5.2%, so current figures reflect a fall of 2.4% in only 7 months.
The news has come as a surprise to economists, who had predicted the rate to remain the same as the April figure.
The reason for the fall is a drop in energy, commodity and food prices, and with these sectors predicted to stay comparatively low by financial experts, the UK’s rate of inflation is expected to stay similarly low.
With the current rate within the 1% bracket either side of an overall rate of 2%, The Bank of England will not have to send an open letter to Chancellor George Osborne this month stating why the UK’s inflation rate is not close enough to set targets. Said targets are an attempt to benefit national economic growth.
The Bank of England has predicted the rates will stay like this for the foreseeable future, with governor Mervin King stating the rate is ‘more likely than not to be above target until the middle of next year’.
The National rate of inflation is affected by numerous factors, and King started his quarterly report by stating that ‘weak growth and high inflation have been the unavoidable consequences of the financial crisis, developments in global commodity prices and the need to rebalance our economy’.
The latest figures hint at the economy heading in the right direction, and King and the Bank of England will be hoping the positive trends continue as Britain attempts to fight its way out of the European financial quagmire.