The Know Daily - Wednesday 22 May 2024

_{Read in 5m 24s ∙ Listening to Son Little ∙}

Some news from southern Europe that’s got us feline good…the Iberian lynx population has doubled in just three years to now number over 2,000 individuals. Although they remain the world’s most endangered feline species, Spain’s government said the new data “allows us to continue to be optimistic” about the big cats’ future.

📉 Economy update

UK inflation fell to 2.3% in April, the lowest level since July 2021.

Tell me more.
Inflation is the increase in the price of goods and services over time - and one of the key ways it’s measured is through the Consumer Prices Index (CPI). Figures released at 7am this morning by the Office for National Statistics (ONS) show this headline rate fell to 2.3% last month, down from 3.2% in March. 

A drop in inflation doesn’t mean that prices are falling - just that they are rising more slowly. 

What’s behind the drop?
It’s mainly down to the recent reduction in the Ofgem energy price cap, which led to lower electricity and gas bills. ONS chief economist Grant Fitzner also cited a further drop in food inflation, but said these falls were “partially offset” by a “small uptick” in petrol prices.

What should we make of the figure?
According to Sky News, it shows that “the fight against price rises is being won”. Inflation peaked at generational highs above 11% in October 2022. 

However, economists had predicted that inflation would fall to 2.1% this month, and the rate is still above the Bank of England’s 2% target. The Guardian described today’s figures as “a bit of a disappointment” for the chancellor Jeremy Hunt. 

What happens next?
When inflation is high, interest rates are kept higher to squeeze the economy. But today’s 2.3% figure will likely encourage the Bank of England to lower interest rates and make borrowing cheaper. 

However, the Bank of England also looks closely at the core inflation figure when setting interest rates. This figure - which strips out volatile elements such as food and energy - fell less than expected in April. Some economists therefore predict that interest rates will not be lowered until later this summer.