UKHospitality calls for interest rate cut as inflation falls

By James McAllister

- Last updated on GMT

UKHospitality calls for interest rate cut as inflation falls to 2.3% lowest level in nearly three years

Related tags Inflation Interest rate Government ukhospitality

UKHospitality has called for interest rates to come down after figures from the Office of National Statistics (ONS) showed inflation falling to its lowest level in almost three years.

UK inflation fell to 2.3% in April, down from 3.2% in March, as a result of easing energy and food costs.

The last time the ONS recorded a lower rate was July 2021.

“Today’s inflation data continues 18 months of improvement and we are now at a normal level of inflation,” says Kate Nicholls, chief executive of UKHospitality.

“The trend is clear, and the Bank of England can now act with confidence. It’s time for interest rates to come down to support businesses investing in their growth.”

The trade body has previously noted that hospitality businesses have been particularly exposed to the rate rises brought on by rising inflation, due mainly to the Covid loans many were forced to take out during the pandemic.

Interest rates currently stand at 5.25% and there had been hope of a cut following the publication of April’s inflation figures.

However, while the rate of inflation has dropped, the decline was smaller than that predicted by City analysts, leading to suggestions in the national press that a cut in interest rates may now not be seen until after the summer.

Notably, while the ONS figures revealed falls in energy and food costs, inflation in the services sector, which includes hospitality, remained high at 5.9%.

Speaking to the BBC​, Rob Wood, chief UK economist at Pantheon Macroeconomics, described the rate as a ‘shocker’, adding that he now expects the more cautious members of the Bank of England's rate-setting committee will ‘take some time’ over potential rate cuts.

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