Hopes of pre-election tax cuts raised by Jeremy Hunt after inflation falls to two-year low

CHANCELLOR Jeremy Hunt yesterday raised hopes of pre-election tax cuts after inflation fell to a two-year low.

He said the drop “opens the door” for lower interest rates, which would make mortgages cheaper.

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And he said it may mean the chance to “boost growth and make work pay” by bringing down National Insurance rates.

It will be welcome news for PM Rishi Sunak, under pressure amid speculation about a challenge to his leadership.

At a meeting of the 1922 Committee last night, Mr Sunak urged backbench Tory MPs to pull together and dismissed “Westminster gossip” of plotting.

Supporters greeted him by banging tables and described his speech as “uplifting”.

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Mr Sunak also told the BBC he would still be PM after the May 2 local elections and said “2024 will prove to be the year the economy bounces back”.

Inflation fell from four per cent to a better-that-expected 3.4 per cent as food shopping and eating out costs eased.

Speculation is rife of a mini-Budget in the autumn before the country heads to the polls.

Mr Hunt, who has cut NI rates by 4p, said: “As inflation gets closer to its target, that opens the door for the Bank of England to consider bringing down interest rates, that brings down mortgage rates, that makes a big difference.

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“It’s far too early to know whether we’ll have another fiscal event before the election, but what you can see is the difficult decisions the Government has taken over the last year are paying off.”

Bank chiefs are today set to hold interest rates at 5.25 per cent as inflation, which was at 11 per cent in 2022, is still above its two per cent target.

Mr Sunak said the fall was “good news for you, your family and the country”.

But Labour’s Shadow Chancellor Rachel Reeves insisted: “Prices are still high, the tax burden is the highest it has been in 70 years and mortgage payments are going up.”