UK inflation returns to 2% target but June BoE cut remains unlikely

First time since 2021

UK inflation has fallen back to the Bank of England’s 2% target in May for the first time since 2021, according to data from the Office for National Statistics.

The drop was widely expected, with the BoE's spring forecast predicting a return to target in 2024. Food prices were the largest contributors to the reduction in the headline figure, the ONS found, while the largest increase came from motor fuels. At the same time, core CPI rose by 3.5% in the year to May, compared with 3.9% in April. The three-year long wait for inflation to fall back to target is a "milestone moment", said James McManus, CIO at Nutmeg, with energy prices a "significant driver" in bringing down the headline figure. UK grocery inflation drops to lowest rate sinc...