Investment analysts Saxo say though cost of living in UK has dropped they are not at the levels needed for the Bank of England (BoE) to reduce base rate figure until late 2024.

Financial experts have warned that the inflation rate fall in Britain is not as good as expected – meaning the Bank of England will have to delay making cuts to the interest rate.

The year-on-year inflation figure fell to 2.3% last month, close to the UK government’s target of 2%. But the fall was not as much as economists expected, leading to concern in the markets about how the British economy is performing.

Much of the fall was down to 2023 high energy costs falling off the charts, and investment analysts at Saxo say the continued poor performance of core services CPI will prevent the Bank of England from cutting the base rate of interest rates until much later this year.

A Saxo spokesperson said: “The European morning begins with news that UK headline inflation has decreased significantly, though not as much as economists had forecasted. UK headline inflation dropped to 2.3% year-on-year in April from 3.2% in March, but it remains above the consensus estimate of 2.1%.

“The progress in Core and Services CPI is even less impressive, with Core CPI falling to 3.9% and Services CPI to 5.9%, casting doubt on the possibility of an early rate cut by the Bank of England with bond futures estimating 39bps rate cuts by the end of the year versus 55bps yesterday.”

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