UK Inflation Drops Slightly in April, Raising Questions on BoE's Interest Rate Strategy

Britain's consumer price inflation fell to 2.3% in April, less than anticipated, casting doubt on the Bank of England's plans to cut interest rates. This modest decrease, the lowest since July 2021, has intensified scrutiny of the BoE's strategies amidst stronger-than-expected services inflation at 5.9%.

(Recasts lead, adds detail and background in paragraphs 2-4) LONDON, May 22 (Reuters) -

Britain's consumer price inflation fell by less-than-expected in April, raising fresh doubt about the Bank of England's plans to cut interest rates in the coming months which would give a boost to embattled Prime Minister Rishi Sunak. British consumer prices rose by an annual 2.3%, down from a 3.2% increase in March and its lowest since July 2021 when it stood at 2.0%, the Office for National Statistics said.

The BoE - which has an inflation target of 2% - and economists polled by Reuters had forecast a bigger drop to 2.1%. Services inflation, closely watched by the BoE as a gauge of domestically generated price pressure, also came in stronger than expected at 5.9%. The BoE's forecasts and the Reuters poll had pointed to a reading of 5.5%.

Sterling rose after the data.