‘Stubborn’ inflation rates could start to tumble in the coming months on the back of falling gas and food prices.
UK Consumer Prices Inflation (CPI) remained firmly in double digits in March, squeezing household budgets and proving more stubborn than expected.
It has led to some speculation that Bank of England policymakers could be prompted to raise interest rates again, from the current rate of 4.25 per cent, when they meet on Thursday.
Markets are now expecting rates to peak at either 4.75 per cent or 5 per cent this year, unless the outlook improves.
But there are some positive indicators on the horizon.
Sainsbury’s has today announced a cut to the price of some of its lines of bread and butter in response to falling commodity prices.
The UK’s second-biggest supermarket chain has lowered the price of its own-brand 250g salted and unsalted butter by 5 per cent to £1.89.
It is also cutting the price of its 800g Soft White Medium, Wholemeal Medium, Wholemeal Thick and Toastie White loaves of bread by 11 per cent to 75p.
The grocer said it was able to lower some prices due to commodity prices for wheat and butter beginning to fall.
Energy industry consultancy Cornwall Insight has also predicted that energy bills are to drop significantly from the start of July.
The firm thinks the price cap on energy bills will fall by more than £1,200 for the average household when it is next updated.
The analysts at Cornwall said they expect the price of electricity will drop to 29.55p per unit from the start of July from 33.2p today with Government support.
Gas prices will fall from 10.3p today – including Government support – to 7.55p from the start of July.
It will mean that the average household pays around £2,063 per year for their gas and electricity, though this will vary based on how much energy they use.
Related: The Dreaded C Word