Inflation is down – but good news for homeowners will have to wait

Headline inflation fell to 2.3 per cent in April, but dig deeper and the economic picture looks less rosy, writes James Moore. The Bank of England is unlikely to provide a much-hoped-for cut in interest rates – and mortgage costs – next month

Prime minister Rishi Sunak welcomed the fall in inflation (PA)

Across the economy, price rises slowed significantly in April with the rate of inflation declining to 2.3 per cent from 3.2 per cent. That is the lowest level for three years and is now within sight of the Bank of England’s hallowed 2 per cent target.

Combined with faster-than-expected economic growth – the first quarter delivered a bounceback from recession and the International Monetary Fund has just upgraded its UK forecast for the year – the numbers seem to be coming good for embattled Rishi Sunak and his chancellor Jeremy Hunt.

They promised to halve inflation when the figure was 10.7 per cent. This has been achieved. While the Bank of England controls the main lever, we have to credit the government for largely aligning fiscal (tax) policy with the Bank’s monetary policy (interest rates) so they don’t work against each other. This is something Liz Truss notably failed to do. Given where inflation is now, that’s one tick. First quarter gross domestic product – the overall size of UK plc – grew by 0.6 per cent. Another tick.