On Wednesday, it was announced that UK inflation had slowed to an annual rate of 3.4% in May, according to official figures from the Office for National Statistics (ONS). The following day, the Bank of England (BoE) announced it would hold interest rates at 4.25%, maintaining last month’s cut and in accordance with persistent inflation. This decision was widely forecast, however the BoE has alluded to the possibility of further cuts as soon as August. Meanwhile, UK inflation remains considerably above the BoE’s official 2% target. Inflation previously hit 3.5% in April, therefore it is encouraging to see a slight easing at 3.4%. Although, external pressures such as the conflict in the Middle East, a weak job market and rising costs will continue to cause economic pressure. The Monetary Policy Committee (MPC) has cut interest rates four times since last summer as it aims to keep in line with the difficult economic climate. May and June’s inflation rate led to the expectation that the MPC would vote in favour of holding interest rates and unlikely to move the needle. Adding to economic pressures are the Government’s decisions to raise employer National Insurance contributions and increase the minimum wage, both of which are contributing to rising costs for UK businesses. Responding to May’s data, Chancellor Rachel Reeves MP said: “We took the necessary choices to stabilise the public finances and get inflation under control after the double-digit increases we saw under the previous government, but we know there’s more to do.” Meanwhile, the BoE’s Governor Andrew Bailey commented on interest rates citing they remain on a gradual downward path, alluding to further cuts. NFDA Chief Executive Sue Robinson welcomed the bank’s decision to hold as it would ease pressure on consumers and dealerships alike.