Inflation falling to 2% should give the Bank of England confidence to ease pressure on businesses through a rate cut, UKHospitality says.
The Bank of England held interest rates at 5.25% for the seventh consecutive time in what it described as a “finely balanced” decision. Andrew Bailey, the Bank’s governor, said: “It’s good news that inflation has returned to our 2% target. We need to be sure that inflation will stay low and that’s why we’ve decided to hold rates at 5.25% for now.”
Mr Bailey was among seven of the nine-member MPC who voted to leave rates on hold. Swati Dhingra and Dave Ramsden voted for a quarter-point cut to 5%.
Responding to this week’s inflation data, Kate Nicholls, Chief Executive of UKHospitality, said: “Inflation coming down to 2% and hitting the Bank of England’s target is the strongest signal yet for interest rates to be cut.
“It’s clear that the economy is heading in the right direction, which should give confidence to the Bank that now is the time to begin easing the sustained pressure from high interest rates on businesses and consumers.
“We need to remember that costs remain high for hospitality businesses and beginning to reduce the cost burden for the sector needs to be a priority for any incoming government.”
Emma McClarkin, Chief Executive of the British Beer and Pub Association said:
“Pubs and brewers will welcome the news that after a sustained and difficult period of high inflation, the target rate of 2% has been achieved. But with energy costs and food and drink 25% higher than in 2022, the cost of doing business remains challenging. While interest rates are unlikely to be lowered during the election period, we now look forward to these easing during the summer and latter stages of the year, and working with the next government to help put in the place the optimal fiscal and regulatory framework that will ensure the beer and pub sector does not just survive but thrives.”
