After almost three years, the UK’s annual inflation rate is back to the government’s 2% target. That ought to be good news for Rishi Sunak and the Conservatives – but given the state of the opinion polls it looks like being far too little, far too late. First the good news. The latest figures from the Office for National Statistics show price pressures are continuing to abate. The headline rate of inflation fell from 2.3% in April to 2% in May and there were also declines in two closely watched measures of underlying inflation. Inflation excluding volatile items such as food, fuel, alcohol and tobacco dropped from 3.9% to 3.5%, while inflation in the services sector – which tends to be more affected by domestic than global factors – dipped from 5.9% to 5.7%. Food price inflation, which was nudging 20% at its peak in late 2022, now stands at 1.7%, down from 2.9% in April. Grocery bills fell by 0.3% on the month, which will be welcome for less well-off households, who spend proportionately more of their budgets on food. There were also declines in the inflation rates for clothing and footwear (3.7% to 3%), recreation and culture (4.4% to 3.9%), and restaurants and hotels (6% to 5.8%) because prices rose less rapidly last month than they did in May 2023. Last week’s figures for average earnings showed pay rising at an annual rate of about 6%. With inflation at 2%, that means people are enjoying a chunky rise in living standards, a reversal of the trend in 2022 when inflation peaked at 11.1% and real pay was falling. International comparisons show that the UK’s inflation rate is lower than those in Germany (2.8%), France (2.6%) and the EU as a whole (2.7%) and the same as that in the US (2%). The bad news is that there is still some way to go before the Bank of England is ready to declare the war against inflation over. At 5.7%, service sector inflation is still higher than Threadneedle Street’s monetary policy committee (MPC) would like, and while Sunak would greatly welcome a cut in interest rates from the Bank on Thursday it isn’t going to happen. The MPC’s meeting in early August looks a much likelier time for borrowing costs to start coming down. Overall, the economy has emerged from the cost of living crisis in better shape than might have been feared in late 2022, after only the mildest of technical recessions despite interest rates being raised from 0.1% to 5.25% between December 2021 and August 2023. But it will take time for voters to forget the squeeze on their living standards caused by the highest inflation in four decades, and time is not on Sunak’s side. The beneficiary of inflation coming back to target will not be the current occupant of 10 Downing Street. It will be Keir Starmer.