Inflation falls to 2% target for first time in nearly three years

The fall in inflation is welcome news to Rishi Sunak but his campaign still looks grim, ITV News Correspondent Romilly Weeks reports

Inflation has fallen to the 2% target for the first time in three years, a decline Rishi Sunak has insisted shows his economic plan is working.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation fell to 2% in May, down from 2.3% in April.

The latest figures mean that prices are still rising across the country, but at a much slower rate than in recent years when households and businesses were being squeezed during the peak of the cost-of-living crisis.

Prime Minister Rishi Sunak hailed the fall as "great news", but warned that it could rise again if Labour won the General Election.

In a video shared on X, he said: "We stuck to a clear plan and that's why the economy has now turned a corner.

"So, let's not put all that progress at risk with Labour. All they would do is spend a load of money, push up inflation and cost every working family £2,000 in higher taxes."

Sunak, in an interview with LBC's Nick Ferrari, added: "It wasn't always easy but we've got there, and inflation is back to target and that means people will start to feel the benefits and it will ease some of the burdens of the cost-of-living."

Chancellor Jeremy Hunt said the news shows the "difficult decisions" taken by this Conservative government have "paid off".

He told broadcasters: "That would not have happened under Labour. They refuse to condemn the public sector pay strikes, that would have meant higher inflation for longer.

"Instead we have lower inflation, taxes starting to come down and, hopefully now, mortgages starting to come down.

"It would be a terrible shame if we turn the clock back and put up taxes for every family with savings, which is what, it now emerges, Keir Starmer plans to do."

'Today, it [inflation] is lower, and that shows the difficult decisions we've taken have paid off,' Chancellor Jeremy Hunt told broadcasters

Labour has insisted that "after 14 years of economic chaos under the Conservatives, working people are worse off", while the Liberal Democrats said it would represent "sheer desperation" from Sunak to "claim their plan for the economy is working".

Shadow chancellor Rachel Reeves said she "welcomed" inflation returning to its 2% target, but added that she was not going to "claim that everything is fine in the economy and that the cost-of-living crisis is over".

She told broadcasters: "I know for many families and pensioners the cost-of-living crisis is still acute because those higher prices, whether it be rents, mortgages, food prices or energy bills are locked in, and people are still struggling with their bills.

"The choice at the next election is between five more years of the Conservatives, more chaos, making working families worse off, or Labour's plans to grow the economy to make working people better off."

Shadow chancellor Rachel Reeves told broadcasters while she 'welcomed' the inflationary fall, that 'unlike the Conservatives, I'm not going to claim that everything is fine in the economy'

The Confederation of British Industry (CBI) said the stage was now set for the Bank of England (BoE) to cautiously cut interest rates, with the Bank's next rates decision coming on Thursday.

But policymakers are widely expected to hold fire on any cuts until after the General Election on Thursday, July 4.

CBI principal economist Martin Sartorius said: "Today's data sets the stage for the Monetary Policy Committee to cut interest rates in August, in line with our latest forecast's expectations.

"However, rate-setters will still need to weigh the fall in headline inflation against signs that domestic price pressures, such as elevated pay growth, are proving slower to come down."

Trades Union Congress general secretary Paul Nowak, reacting to the news, said it cannot disguise "the worst period for living standards in modern times".

He said: "Working people have paid the price for this government's failure with household debt also increasing at record levels.

"We can't go on like this. We need a government that will make work pay."

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