The annual inflation rate in Britain unexpectedly dropped to 2.5 percent last month, according to official data released on Wednesday. This decrease came as a relief for the government amid economic challenges. Analysts had predicted no change from the previous month’s rate of 2.6 percent. The data from the Office for National Statistics revealed this decline, following recent concerns over state borrowing costs and the value of the pound.
Finance Minister Rachel Reeves emphasized the ongoing efforts to support families with the cost of living, stating that more work needs to be done in this area. Despite the decrease in inflation, Britons are still facing challenges such as high interest rates and increased energy bills. Factors contributing to the decline in inflation included lower hotel prices and modest increases in tobacco costs, offset by higher fuel and second-hand car prices.
In response to the data, London’s FTSE 100 index rose by 0.7 percent, and the British pound strengthened against the dollar and euro. Reeves acknowledged the need for accelerated economic growth to address market uncertainties. The government has been under pressure due to rising bond yields and struggles to stimulate economic expansion. The Bank of England, aiming for a 2.0 percent inflation target, has adjusted interest rates accordingly, with further reductions expected in the future.