Inflation has fallen to 2% in the year to May, the first time it has reached the target set by the Bank of England (BoE) for almost three years.

The Office for National Statistics (ONS) revealed that consumer price index (CPI) inflation has come down from 2.3% in April, which missed the analysts’ expected figure of 2.1%.

CPI inflation, which is at its lowest since July 2021, was driven down by the monthly change in annual food rates, as prices have fallen this year after rising a year ago.

The largest upward contribution to CPI inflation came from motor fuels, with prices increasing slightly in the year to May, but were falling a year previously.

Head of money and markets at Hargreaves Lansdown, Susannah Streeter, said: "It’s been a long time coming, but finally inflation has hit the BoE’s target. The last time inflation stood at 2% was in the run up to the Euros in July 2021, just before pent-up demand was unleashed while pandemic restrictions eased.

"It is clear that disinflationary pressures have been building up through the UK economy. The effect of unemployment ticking up to 4.4% in April may have made some workers more cautious in their spending patterns. That certainly showed up in the latest economic growth figures, which showed activity in the retail sectors slowing sharply. The risk is that if borrowing costs stay high through the summer, the economy may struggle to shift meaningfully out of stagnation mode.

"There are signs that more consumers are increasingly financially resilient and may be willing to spend more, helping support the economy in the months to come, especially given the big sporting events filling calendars. But longer-term investment will still be needed to provide an engine of growth."

Despite inflation reaching its 2% target, some analysts are sceptical that this will lead to a cut in the BoE’s base rate.

This has remained at its highest level for 16 years, 5.25% for six consecutive periods.

Director of personal finance at AJ Bell, Laura Suter, added: "The [inflation] figure will be heralded by Rishi Sunak on the campaign trail as vindication of the policy setting moves that the Conservatives have made over the past few years. In reality, much of the leg work was done by the BoE, with the Government being very limited in how much they control inflation – but that’s unlikely to stop them from doing a bit of glory-stealing.

"Inflation hitting target means many will be expecting a cut to interest rates at the BoE’s meeting tomorrow. However, it would be very unlikely for the ratesetters to cut interest rates during an election campaign. The future path for inflation – and so rates – will be impacted by whoever becomes Prime Minister and how their fiscal policy shapes up.

"It’s highly likely the BoE will want to wait to see the outcome of the election and the final economic plans before making that first cut. With no meeting in July, that means all eyes are now firmly on the August Monetary Policy Committee meeting for our first potential cut to rates."

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