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​UKHospitality Advocates for Interest Rate Reduction

​UKHospitality Advocates for Interest Rate Reduction

Posted by Emma on 22nd May 2024

UKHospitality has urged for a decrease in interest rates following the latest Office of National Statistics (ONS) data, which indicates a significant drop in inflation to its lowest point in nearly three years. Inflation fell to 2.3% in April, down from 3.2% in March, driven by reduced energy and food prices. The last instance of a lower inflation rate was in July 2021.

Kate Nicholls, CEO of UK Hospitality, emphasised the urgency of the situation, stating, "Today's inflation data continues to improve by 18 months, and we are now at a normal level of inflation. The trend is clear, and the Bank of England must act decisively. It's crucial for interest rates to come down now to support businesses investing in their growth."

The hospitality sector has felt the impact of previous rate hikes, mainly because of the Covid loans many businesses needed during the pandemic. With interest rates currently at 5.25%, there had been hopes for a reduction following the release of the April inflation data.

Despite the drop, the decrease in inflation was less than analysts expected, leading to predictions in the media that any reduction of interest rates might not occur until after the summer. While energy and food costs have decreased, the ONS reported that inflation within the services sector, including hospitality, remains high at 5.9%.

Rob Wood, chief UK economist at Pantheon Macroeconomics, offered a contrasting view, telling the BBC, "This rate is a shocker, and I expect the more cautious members of the Bank of England's rate-setting committee will take some time over potential rate cuts. This caution is warranted given the current economic climate."

We invite you to share your thoughts and opinions in the comments below. Should the Bank of England reduce interest rates sooner rather than later?