Sunak pledges further tax cut after inflation drops to two per cent

19 June 2024, 10:22 | Updated: 19 June 2024, 10:26

Rishi Sunak has pledged to cut taxes further after inflation fell to the Bank of England's target for the first time in nearly three years.

Rishi Sunak has pledged to cut taxes further after inflation fell to the Bank of England's target for the first time in nearly three years.

The latest official figures showed headline CPU dropping to two per cent in May, from 2.3 per cent in April, paving the way for interest rate cuts.

It marks the first time inflation has been at the BoE's goal since July 2021, before the cost-of-living crisis saw inflation shoot up – at one stage hitting levels not seen for 40 years.

The Prime Minister said that the drop in inflation meant any future Tory government would now be in a position to cut more taxes.

He told LBC that the last few years have been "tough for everybody" but his government "stuck to a plan"."It wasn't always easy, but we've got there."

“It is because of that economic stability that we have restored, which was my priority when I got this job, that we have now been able to start cutting people’s taxes.

“If I win this election, I want to keep doing more of that, cutting people’s taxes at every stage of their life.”

Sunak on Inflation

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Shadow chancellor Rachel Reeves said people were still “worse off” despite the decline.Services inflation, which has been highlighted as a potential hurdle to interest rate cuts, fell to 5.7pc in May, down from 5.9pc in April. 

However, this was less than the drop to 5.5pc that economists had predicted.

The Bank of England is not expected to begin cutting interest rates at its next meeting tomorrow and the latest data has seen traders reduce bets on a reduction in borrowing costs in August, although some economists still think it is a possibility.

Yesterday Keir Starmer refused to rule out a council tax rise. He dodged questions on whether council tax could rise, saying "it would be foolish to write five years worth of budgets."

He told LBC: "It would be foolish to write five years worth of budgets on air.

"There are some tax rises, we want to get rid of non dom loopholes, private equity loopholes, we want a better windfall taxes.

"None of our plans require a tax rise, they will be based on growth."