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Inflation turns corner and could force interest rate rethink, ICAEW says

Author: ICAEW

Published: 24 May 2023

Suren Thiru, Economics Director at ICAEW, responds to the UK inflation figures for April 2023, released by the Office for National Statistics today (Wednesday 24 May 2023):

“While still staggering, the return to single digit inflation suggests the UK has turned a corner in its fight against soaring prices after lower energy bills pulled down the headline rate.

“This will be the first of the big falls in inflation this year, with the headline rate set to fall sharply over the summer once the expected reduction in Ofgem’s energy price cap drives down energy bills from July.

“The drag on customer demand from a cooling jobs market, higher taxes and the lagged impact of rising interest rates may mean that inflation falls more quickly than the Bank of England has forecast.

“April’s decline in inflation is large enough for the Monetary Policy Committee to keep interest rates on hold next month, but if they continue to risk overtightening, it could worsen the cost-of-living crisis and the squeeze on businesses.”


Notes to editors:

Contact: ICAEW media office media.office@icaew.com, tom.mackintosh@icaew.com or 07866 853 841