The inflation rate, which is the measure of prices of things increasing over time (such as food and household bills) has fallen to 2% for the 12 months up to May 2024.
That’s down from 2.3% for the year up to April 2024. However, it doesn’t mean prices are falling, just not rising as fast – it was a staggering 11.1% in October 2022.
2% is the target for the Bank of England to keep inflation at, so it’s great news for potential interest rate cuts – which is what they do when inflation is low.
The Bank of England interest rate is the interest rate banks get from the Bank of England for storing their money there (so just like an interest rate you get in a bank).
A high Bank of England rate makes things like savings accounts pay higher interest (such as on Cash ISAs), but also increase the interest rates on things like mortgages.
If the interest rate is reduced, it usually means lower interest rates on mortgages and loans for you in future (and hopefully more money in your pocket), but you'll make less interest on your savings. We’ll keep you updated when they happen!
