Festive joy for Rishi Sunak as inflation falls to two-year low and hopes grow of interest rate cut in early 2024
PRIME Minister Rishi Sunak got an early Christmas gift yesterday — as inflation fell.
And the surprise slump has boosted hopes of a spring tax giveaway.
Experts are now predicting interest rate cuts starting in May, before a general election.
Inflation — the rate at which prices rise — dropped from 4.6 per cent to 3.9 per cent last month, the lowest for two years.
The PM hailed the figures from the Office for National Statistics as “good news for everyone”.
And Chancellor Jeremy Hunt insisted the economy is “back on the path to healthy, sustainable growth”.
He could now cut personal taxes in the next Budget.
And money markets are betting there will be five interest rate cuts next year.
Traders are forecasting rates at lower than four per cent, down from the current 15-year high of 5.25 per cent, by next December.
While Mr Sunak has met his self-imposed target of halving inflation, prices are still rising at almost twice the Bank of England’s two per cent goal.
Mr Hunt said: “The only way we can make life better for families who are working very hard and feeling they are in a cost of living crisis, the like of which they hadn’t seen for many years, is to get the economy growing sustainably.
“On top of which, when we can, we want to bring down the tax burden so that people keep more of the money that they earn every month.”
This month, the Bank governor Andrew Bailey said there is “still some way to go” to get inflation down.
The Bank also said monetary policy is likely to remain “restrictive for an extended period of time”.
Cabinet minister Mel Stride told radio station LBC inflation falling was a “turning point”.
Shadow Chancellor Rachel Reeves said: “The fall will come as a relief to families.“