A smaller drop in inflation than expected has prompted warnings the Bank of England may delay a cut to interest rates.
Inflation fell to 2.3 per cent in April, down from 3.2 per cent in March.
The Office for National Statistics said the largest downward contributions to the latest figure was falling gas and electricity prices, this was offset by upward contributions of motor fuels rising this year but falling a year ago.
Chris Beauchamp, chief market analyst at trading platform IG Group, said while the inflation figure was closer to the Bank of England's 2 per cent target it was not a given the bank would cut rates in June.
He said: "The hotter inflation in UK services is the fly in the ointment for the BoE in this morning’s numbers.
"While expectations had been a little too bullish on inflation’s slowdown, the drop in the headline figures does make a stronger case for a June cut. But it is by no means a done deal."
Michael Metcalfe, head of macro strategy at State Street Global Markets, said inflation was not comfortably close to the target yet.
He said: "The annual inflation rate fell a lot in April, but not quite as far as anticipated and with service sector inflation still running close to 6 per cent, softer inflation data will still be needed for the BoE to be comfortable cutting rates.
"Unfortunately, online inflation data for the first half of May shows a continuation of above average monthly readings for the UK, a sticky problem for the BoE."
While Daniel Casali, chief investment strategist at Evelyn Partners, said the broader lower inflation should mean a rate cut this year, and possibly still in June.
He said: "Although the headline CPI inflation of 2.3 per cent is higher than the BoE’s April forecast of 2.1 per cent, an interest rate cut at its June 20 meeting is a distinct possibility given the data does not show the economy is overheating.
"However, before that meeting there will be one more CPI print to win round a majority of Monetary Policy Committee members to favour an interest rate cut.
"The MPC will also consider that wage growth (albeit slowing) remains elevated. Nevertheless, it will be encouraging for the MPC that falling job vacancies points to lower wage rates in the months ahead."
Lindsay James, investment strategist at Quilter Investors, said the inflation figure puts the UK on course for its first interest rate cut in more than four years this summer.
She said: "The fact the headline rate begins with a two is incredibly symbolic given the events since the pandemic and the fact inflation was over 11 per cent less than two years ago.
"Investors will not want the Bank of England to be as cautious on the way down with rates as they were on the way up, when inflation was spiking, and this simply ratchets up the pressure come its next meeting in June."
