Services inflation higher than expected; electricity and gas prices in record 27% drop, food price rises lowest since 2021

Financial markets have scaled back their expectations for an interest rate cut in June, and August is also looking slightly less likely. They are forecasting a reduction by September, though.

Before today’s inflation data, which showed services inflation is more stubborn than expected, markets had fully priced in two rate cuts this year, one by August and another one before the end of the year. Investors are now split on whether there will be a second reduction.

The cost-of-living crisis is not over - no matter how much ministers pretend it is. Prices are still going up. Food and energy bills are much higher than a couple of years ago. And many are being hit by soaring mortgage repayments.

That’s because household budgets have been decimated by the highest price rises in the G7 and wages have flatlined over the last 14 years.

Pay packets are still worth less today than in 2008, with working people on course to end this Parliament poorer than at the start.

Euro 2024 men’s football tournament and Olympic Games could drive summer sales, says analyst

• Business live – latest updates

Grocery price inflation in Great Britain has slowed to the lowest level since 2021, while households are still trading down to cheaper products after two and a half years of rapidly rising prices, research has shown.

While pressures remain on household budgets, sales of burgers, beer and wine jumped during the bank holiday weekend at the start of May, according to the retail researchers Kantar. It found grocery price inflation had fallen for the 15th month in a row, to 2.4%, the lowest rate since October 2021 and down from 3.2% in April.

Supplier hands out £127m to investors as it says normal service has been restored for 85% of customers

• Business live – latest updates

The owner of South West Water has said normal service has been restored for 85% of its customers after unsafe drinking water led to more than 100 cases of a waterborne disease in Devon, as it raised its dividend payout to shareholders.

After cryptosporidium, a disease that can cause unpleasant symptoms such as diarrhoea and vomiting, was detected in the water supply in the Brixham area of Devon last Wednesday, 17,000 households and businesses were told by South West Water not to use their tap water for drinking without boiling and cooling it first.