In February, UK inflation eased to 3.4%, proving a little relief for Prime Minister Rishi Sunak ahead of the election. This development aligns with forecasts, positioning the Bank of England (BoE) to consider rate cuts later in 2024.
Despite rising motor fuel prices, food and restaurant prices declined subsequently. As a result, core inflation dropped to 4.5%, with service inflation dropping to 6.1%. Despite this moderation, the UK still maintains the highest inflation rate among the G7 nations.
Finance Minister Jeremy Hunt sees scope for abolishing social security taxes as inflation approaches the 2% target. It is anticipated that the Monetary Policy Committee of the Bank of England will hold interest rates steady for the time being but has hinted at possible reductions in the future.
Despite the reprieve from inflation, Sunak’s political party continues to face obstacles. Hunt refers to potential tax reform opportunities as inflation approaches target levels.
Sunak maintains a positive outlook on the economy’s recovery and advises voters to support the Conservatives so that his agenda can be implemented. However, Labour emphasises the enduring fiscal burden that was encountered during the Conservative regime.
