What inflation falling means for you - from mortgage interest rates to groceries

UK inflation slowed to 2.3 percent in April, the lowest level since July 2021, according to new official figures. Prime Minister Rishi Sunak declared that inflation is "back to

normal" and said it is a "major milestone" for the country. But what is inflation and why has it fallen? Inflation is the term used to describe the rising price of goods and

services. The inflation rate refers to how quickly prices are going up. April's inflation rate of 2.3 percent means that if an item cost £100 a year ago, the same thing would now cost

£102.30. It is lower than the 3.2 percent inflation rate recorded in March, meaning that prices are rising more slowly than they previously were. However, it is higher than the 2.1 percent

rate that some economists had been expecting. DOES THIS MEAN THAT THE COST OF LIVING IS FALLING? No, the cost of living is still rising, just at a much slower rate than it has in recent

years. In fact, about two years ago, prices were soaring by around a 10th, largely because of significantly higher gas and electricity costs. Inflation has been steadily easing back over the

past year-and-a-half. WILL THE COST OF LIVING EVER GO DOWN? The Government does not want prices to fall. It sets the Bank of England, the UK's central bank, a target to keep the

inflation rate at 2 percent. It says this is the ideal level to help people and businesses plan their spending. However, some items have been going down in price. Gas and electricity prices

were about 27 percent lower in April, compared with the previous year, the Office for National Statistics (ONS) said on Wednesday. Some food prices also fell last month, such as fish, milk,

cheese and eggs. Other food prices, like meat, vegetables and bread, have just risen at a slower rate. WHAT DOES THE FALL IN INFLATION MEAN FOR INTEREST RATES? Interest rates are used by the

Bank of England as a tool to help control inflation. Rates are currently at 5.25 percent, having been held at the level for the past six votes by the Bank's policymakers. Economists

had thought April's inflation data could persuade the Bank to cut interest rates when the Monetary Policy Committee next meets in June, if it showed that prices were under control.

However, services inflation, which looks only at service-related categories like hospitality, culture and education, declined by significantly less than economists had predicted. James

Smith, developed markets economist for ING, said services inflation is "the single most important indicator for the Bank of England". SO WHEN COULD INTEREST RATES BE CUT? Mr Smith

said the latest inflation data reduces the chances of interest rates being cut in June. Daniel Mahoney, UK economist at Handelsbanken, said it "seems very unlikely now that we'll

see a rate cut in June". "Before this latest data on inflation was released, markets thought it was probably about 50/50 as to whether we would see an interest rate cut in June or

not," he said. The higher-than-expected rate, and services inflation figure, reinforces the prediction that an interest rate cut will come in August, he added.