National inflation easing proves promising that an interest rate cut is imminent, a Cumbrian business-to-business organisation has said.

Inflation has returned to the two per cent target for the first time in almost three years in what comes at a critical time, just weeks before the nation heads to the polls.

The Office for National Statistics (ONS) said Consumer Prices Index (CPI) inflation fell to two per cent in May, down from 2.3 per cent in April.

It follows nearly three years of above-target inflation, with CPI last recorded at two per cent in July 2021, before shooting higher amid the cost-of-living crisis.

The data will be watched closely ahead of the Bank of England’s next interest rate decision on Thursday, but policymakers are widely expected to hold fire on any cuts until after the General Election on July 4.

It comes less than three weeks before polling day and as the political parties home in on economic pledges in their manifestos.

The Confederation of British Industry (CBI) said the stage was now set for the Bank of England to cautiously cut interest rates.

This was echoed by Suzanne Caldwell, managing director of Cumbria Chamber of Commerce.

She added that it’s also a ‘further sign that the UK is exiting the inflation crisis which began in late 2020’.

“It provides additional weight for an interest rate cut in the coming months, something which will be welcomed by businesses of all shapes and sizes, for the impact directly on their borrowing and/or a more indirect impact through their customers,” she said.

Research by several chambers reported a steady decline in the number of businesses concerned about inflation, from a record peak of 84 per cent in mid-2022.

“This is positive news, but prices aren't falling, just rising more slowly, and the economic outlook remains challenging,” she said, adding that the Chamber’s latest forecast expects inflation will increase to 2.3 per cent by the end of 2024.

Addressing future policymakers, Ms Caldwell said they should ‘focus on the long-term’, citing the Chamber’s ‘election manifesto’ which includes a five-point plan for immediate action for the new government.

“We need a green industrial strategy, better skills planning, business rate reform, improved relations with the EU, and support for SMEs to embrace AI," she concluded.