Are the British starting to see the end of the tunnel? After a 22% increase in the cost of living since spring 2021, the United Kingdom seems to be returning to a less frenetic pace of price increases and closer to that observed in other G7 countries such as France and the UNITED STATES.

Official figures published across the Channel on Tuesday show that inflation only increased by 2.3% in April over one year, compared to 3.2% in March. The cost of living is still rising, of course, but to a much lesser extent than in the fall of 2022 in particular, when consumer prices jumped by 11.1%.

This is good news for consumers, as well as for the Conservative government, which is struggling in the polls. Prime Minister Rishi Sunak hailed “an important moment for the economy”. And taking advantage of this improvement, he announced a few hours later the calling of early general elections for July 4. “Inflation has returned to its normal level. This shows that our action is bearing fruit,” he then added.

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The slowdown in price increases seen last month was largely explained by falling energy and fuel prices – a record drop of 27.1%. As for food prices, they continue to increase but less quickly (2.9% compared to 4% a year earlier).

However, not all inflation signals have turned green in the UK. Due to continued high interest rates, housing costs are not decreasing, quite the contrary: owners have had to absorb a 6.6% increase in property-related expenses while rents have jumped by 8.9% over one year. Likewise, catering prices increased by 6%, notably due to the increase in the hourly minimum wage which came into force last month.

Consequently, inflation recorded in April is higher than the level anticipated by economists – who expected 2.1% – and above all higher than the 2% target set by the Bank of England. Concretely, if inflation does not fall, the monetary committee of the Bank of England risks maintaining the key interest rate at 5.25% over the coming months. “We believe that the key rate should be revised downwards in June. (…) However, given the inflation figures published today, this decision promises to be very delicate,” analyzes Chris Hare, economist at HSBC Global Research.

Paul Dales, chief economist at Capital Economics, is even more cautious, particularly given the level of inflation in the services sector. “Even if we still have to wait for the publication of figures concerning the level of wages and consumer prices between now and the next monetary committee on June 20, a reduction in the key interest rate seems unlikely, including in the month of August,” he believes.

The Bank of England has left its key interest rate unchanged at 5.25% since August 2023 after having regularly increased it over the previous eighteen months in an attempt to stem inflation. If the institution lowered its key rate at its June meeting, before the elections, the decision would be applauded by the Conservative Party, which positions itself as the party of owners. On Wednesday, former minister and current MP Paul Scully called on the institution to lower its interest rate “to relieve homeowners who have to renegotiate their loan for several years”. However, the government is unable to influence this decision because the Bank of England is independent. And there is no indication that a reduction in the key interest rate would have the slightest electoral effect expected by the Tories in power since 2010.

The Sunak government’s economic record is hardly stellar. Figures published on Wednesday indicate that the United Kingdom’s debt level has increased by 2.3% in one year and reached a level not seen since the 1960s (it is close to 100% of GDP). As for the purchasing power of the British, it has fallen by 2.3% since spring 2021 despite an increase in salaries (5.7% in the first quarter).

On the benches of the Labor opposition, MP Darren Jones, Treasury Minister in Keir Starmer’s shadow cabinet, even before the announcement of the elections, remarked that the United Kingdom “is not yet out of the woods” because it remains very vulnerable to variations in energy prices on the international market.