LONDON - Britain's annual inflation rate slowed to a near three-year low in April as energy prices cooled further, official data showed Wednesday, boosting the governing Conservatives before this year's general election.

The Consumer Prices Index slowed to 2.3 percent from 3.2 percent in March, the Office for National Statistics revealed in a statement, though it was still faster than the 2.1 percent analysts were expecting.

April marked the lowest level since July 2021, when inflation had stood at the Bank of England's 2.0-percent target.

The news comes after the British central bank this month signalled a summer interest rate cut, as it held borrowing costs at a 16-year peak of 5.25 percent to further dampen price rises.

In the UK, food and drink price rises slowed further to reach the lowest level since late 2021

Following the inflation data, most analysts said a rate reduction was unlikely to occur as soon as June, when the European Central Bank is forecast to decrease eurozone borrowing costs.

The Federal Reserve is also expected to cut US interest rates this year as global inflationary pressures subside.

'No champagne corks'

Sharply lower inflation sets the scene for this year's general election, as beleaguered Prime Minister Rishi Sunak's Conservatives trail the main opposition Labour Party in opinion polls.

"Today marks a major moment for the economy, with inflation back to normal. This is proof that the plan is working and that the difficult decisions we have taken are paying off," insisted Sunak, who has made cutting inflation a top priority.

However, Labour finance spokesperson Rachel Reeves slammed the Tories' stewardship of the economy, which emerged in the first quarter from a shallow recession.

"Inflation has fallen but now is not the time for Conservative ministers to be popping champagne corks. Prices have soared, mortgages bills have risen and taxes are at a seventy year high," Reeves argued.

Prices are still rising on top of the sharp increases seen in recent years but at a far slower rate, with businesses and households weathering a cost-of-living crisis.

That has been worsened by elevated BoE interest rates which ramp up the cost of loans, denting disposable incomes and company investment, thereby crimping economic activity.

The International Monetary Fund warned Tuesday that premature BoE rate cuts could risk higher inflation -- but delayed easing could "stall or even reverse" the recovery.

"We will likely see the BoE hold interest rates for a little longer," said ADSS analyst Mahmoud Alkudsi in response to the data.

"This encouraging inflation data may be the tipping point for the BoE, but they will likely want to see this level of inflation sustained before relaxing" monetary policy.

Energy cap

Inflation slowed rapidly last month after energy regulator Ofgem decreased the price cap on energy bills for most UK households to the lowest level for more than two years.

Gas and electricity bills sank in April on lower wholesale energy prices, which had surged in the wake of key producer Russia's invasion of Ukraine in early 2022.

Food and drink price rises also slowed further to reach the lowest level since late 2021.

The BoE began a series of rate hikes in late 2021 to combat inflation, which rose after countries emerged from Covid lockdowns and accelerated after Moscow invaded Ukraine.

British inflation peaked at 11.1 percent in October 2022 and has declined sharply since then.

Separately, ONS data showed Wednesday that state borrowing -- or the difference between expenditure and income -- overshot forecasts in April to douse hopes of more pre-election tax cuts.

Public sector net borrowing jumped to £20.5 billion ($26 billion) in April. That overshot expectations of £19.3 billion and compared with £19 billion a year earlier.