Chancellor Jeremy Hunt hailed a fall in inflation to close to two per cent but admitted it would still take time before people “actually feel it when they do their weekly shop”.
He said many households are still finding it “tough” after prices spiralled in Britain but stressed there were “healthy prospects going forward”.
He also admitted that millions of people’s living standards would not return to pre-pandemic levels until early next year, after the general election, following the Covid pandemic and Putin’s ongoing war in Ukraine.
Speaking to ITV’s Good Morning Britain after inflation fell to 2.3 per cent, the Chancellor said: “Do people feel better off now than a few years ago? No, because we have had something that you and I have never had in our lifetimes.
“We have had two massive economic shocks in quick succession so no, they don’t feel better than they felt a few years ago.”
Asked if the cost-of-living crisis is over as inflation fell again, Mr Hunt told LBC Radio: “I don’t think you can say that because although it’s very encouraging news for people who are worried about cost-of-living pressures, inflation is now lower than it is in eurozone, France, Germany or America...prices are still higher in absolute terms than they were a year ago so people still feel those pressures.
“We have turned a corner but it will take time for people actually to feel it when they do their weekly shop.”
His comments came as a new poll by Savanta for the Centre of London showed one in four Londoners saying they could not fully afford to pay a surprise £50 bill without help, and supermarkets and food manufacturers came under fire in Parliament from MPs for “shrinkflation” and “skimpflation”.
Inflation fell to the lowest level in nearly three years in April as energy prices continued to cool, dropping from 3.2 per cent in March to 2.3 per cent, according to the Office for National Statistics.
But this was still higher than expected by the City and markets swiftly put back expectations of the first interest rate cut from June to September, as services inflation which is a key indicator watched by the Bank of England remained high at 5.9 per cent, dipping only very slightly from six per cent.
Some Tories had hoped that inflation, having peaked at more than 11 per cent, would fall to the Bank of England Monetary Policy Committee’s two per cent target, paving the way for a series of interest rate cuts before the general election, widely expected in the autumn.
Lower gas and electricity prices helped bring down the overall inflation figure.
Food and drink price rises also slowed for the 13th month in a row to 2.9 per cent in April, from four per cent in March, and the lowest level since November 2021.
Rishi Sunak declared inflation was “back to normal” in response to the latest figures, and that “brighter days are ahead”.
But the Chancellor also stressed how many families were still struggling to make ends meet with higher mortgage, rent and other bills.
“Yes, life is tough,” he told BBC radio.
“The question is, going forward in an election year, the choice that people make, and the reason that independent, international commentators say that the UK is in a good place is because, in their words, the Prime Minister and I have taken difficult decisions that are paying off.
“The question going forward, is whether a Labour government will take those difficult decisions, on having a flexible labour market, on welfare reform...”
But shadow chancellor Rachel Reeves stressed: “After fourteen years of Conservative chaos families are worse off. Prices in the shops have soared, mortgage bills have risen and taxes are at a seventy year high.”
Liberal Democrat Treasury spokesperson Sarah Olney added: “Nobody will be feeling any better off after today, with families still facing a £9 billion mortgage bombshell this year alone.
“Conservative Ministers cannot celebrate today after presiding over the worst cost of living crisis in a generation.”
Meanwhile, Mr Hunt was dealt a blow, possibly making it harder to deliver pre-election tax cuts, as official figures revealed borrowing for April overshot forecasts, hitting £20.5 billion, in the fourth-highest April since records began in 1993.
The ONS estimated that public sector net borrowing was £1.5 billion more than in 2023, partly pushed up by falling national insurance contributions.
Britain’s official forecaster, the Office for Budget Responsibility had estimated borrowing would come in at £19.3 billion for April.
