UK Inflation Hits Target, Boosting Sunak's Campaign as BoE Considers Rate Cuts

The UK's inflation rate has returned to the Bank of England's target of 2% for the first time in nearly three years, offering a welcome boost to Prime Minister Rishi Sunak's election campaign. Consumer price inflation fell from 2.3% in April to 2% in May, aligning with economists' expectations. Despite the drop in headline inflation, underlying pressures remain, with services inflation at 5.7% and core inflation at 3.5%. The Bank of England is unlikely to cut interest rates at its upcoming meeting, though a reduction may be considered in August or later. The sharp decline in UK inflation contrasts with higher rates in the Eurozone and the US, where May's inflation rates were 2.6% and 3.3%, respectively. While the drop provides some relief, consumer prices have risen approximately 20% over the past three years, significantly impacting living standards.