- Volatile energy and food price pressures are subsiding
- But getting inflation back down to target will be a long process
Data released this week showed that the headline UK inflation rate had dropped below 5 per cent for the first time in two years. The Bank of England (BoE) will be pleased that rate hikes seem to be paying off. The prime minister will also breathe a sigh of relief that his target of halving inflation by the end of the year has been met.
But just last month, BoE governor Andrew Bailey warned reporters: “Let’s not get carried away, there is an awful lot still to do.” He’s not wrong: the inflation target is 2 per cent, meaning that we need to halve the inflation rate again before we can really claim victory. The problem is that this next push could prove even more difficult.