Rishi Sunak hails ‘proof the plan IS working’ as UK inflation rate falls again to lowest level in years
RISHI Sunak today insisted his plan to revive Britain’s economy is working as inflation finally hit close to 2%.
The PM described reaching the target figure as a “major moment for the economy” and vowed that “brighter times ahead”.
He said: “Today marks a major moment for the economy, with inflation back to normal.
“This is proof that the plan is working and that the difficult decisions we have taken are paying off.
“Brighter days are ahead, but only if we stick to the plan to improve economic security and opportunity for everyone.”
Chancellor Jeremy Hunt acknowledged the past few years have been “difficult”.
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But he heaped praise on Britain for having better economic prospects than other major European states.
Mr Hunt said: “Today is an important day for the economy, with inflation now back within normal range.
“The last few years have been difficult, but the IMF say the economy is approaching a soft landing – and our long term prospects are better than any other major European economy.”
While government spent this morning celebrating calmer fiscal times, Labour warned that “now is not the time for Conservative ministers to be popping champagne corks and taking a victory lap”.
Analysis: Good news for Rishi
By Noa Hoffman, Political Correspondent
RISHI Sunak will be beaming from ear to ear this morning with news that inflation has finally plummeted to 2%.
Hitting the target figure was one of the PM’s five key promises to the public, pledges by which he wants voters to judge his time in No10.
At PMQs expect Mr Sunak to say that with inflation under control, his government can start to rebuild the economy and at last boost growth.
With a showdown general election around the corner, he will hint that Chancellor Jeremy Hunt can focus all his efforts on slashing more taxes and forging a path to the elimination of national insurance all together.
Meanwhile, Labour will do all it can to rain on the PM’s parade.
Sir Keir Starmer and Rachel Reeves will warn that hitting 2% doesn’t change the fact that households across Britain are still feeling the cost-of-living pinch – and feeling it hard.
The duo will argue that a mere number doesn’t mean families are finally free from eye-watering prices in supermarkets or that failing public services will now miraculously improve.
PMQs will be a battle between the two major parties on where they can take the economy next with months to go before Brits head to the ballot box.
Mr Sunak will insist there couldn’t be a worse time for families to take a chance on Labour, who have a shoddy record on managing money and business.
Sir Keir will say it was the Tories who got Britain into this dire situation in the first place.
But both will agree – it’s the economy, stupid.
Shadow Chancellor Rachel Reeves said: “Prices in the shops have soared, mortgage bills have risen and taxes are at a seventy year high.
“Rishi Sunak is now putting family finances at risk again with his £46 billion unfunded policy to abolish national insurance that will mean higher borrowing, higher taxes or the end of the state pension as we know it.
“It’s time for change. Labour’s first steps will deliver economic stability so we can grow our economy and keep taxes, inflation and mortgages as low as possible.”
New data shows the UK’s rate of inflation fell to the lowest level in almost three years.
Consumer Prices Index (CPI) inflation stood at 2.3% in April according to fresh figures from the Office for National Statistics (ONS).
This is down from 3.2% in March and marks the lowest level since July 2021.
Why does inflation matter?
INFLATION is a measure of the cost of living. It looks at how much the price of goods, such as food or televisions, and services, such as haircuts or train tickets, has changed over time.
Usually people measure inflation by comparing the cost of things today with how much they cost a year ago. The average increase in prices is known as the inflation rate.
The government sets an inflation target of 2%.
If inflation is too high or it moves around a lot, the Bank of England says it is hard for businesses to set the right prices and for people to plan their spending.
High inflation rates also means people are having to spend more, while savings are likely to be eroded as the cost of goods is more than the interest we’re earning.
Low inflation, on the other hand, means lower prices and a greater likelihood of interest rates on savings beating the inflation rate.
But if inflation is too low some people may put off spending because they expect prices to fall. And if everybody reduced their spending then companies could fail and people might lose their jobs.
See our UK inflation guide and our Is low inflation good? guide for more information.
The data shows inflation is now closer towards the Bank of England’s 2% target.
It comes just a day after the IMF (International Monetary Fund) upgraded UK growth for this year and forecast the economy will grow faster than any other large European country over the next six years.
Pressure is now on the BoE to reduce interest rates which are still at a 16-year high of 5.25%.
To do so it will be looking for signs that services inflation has weakened.
The BoE is due to meet again to assess interest rates on June 20.
ONS chief economist Grant Fitzner said: “There was another large fall in annual inflation led by lower electricity and gas prices, due to the reduction in the Ofgem energy price cap.
“Tobacco prices also helped pull down the rate, with no duty changes announced in the budget.”
Meanwhile, food price inflation saw further falls over the year, although these were partially offset by a small uptick in petrol prices.
CPI food inflation edged down to 2.9% in April from 4% in March – much lower than its peak of almost 20% in the spring of 2023.