“Today’s data indicating a 2% increase in the CPI rate shows the UK is exiting its three-year inflation crisis and makes a bank rate cut more likely.

“Our own indicator, tracking business concern over inflation, shows that it is still the top concern but has been waning since its all-time high in 2022. Risks remain, with global conflicts and trade tensions major sources of uncertainty, and services inflation proving stubborn.

“A rate cut would ease the cost of borrowing and help induce investment in smaller firms. This will be essential to reverse the trend of anaemic investment facing many SMEs.

“With signs that a rate cut is imminent in the USA, we’ve seen the start of a rotation of investment into small cap firms.

“It’s vital that similar firms in the UK have access to the capital needed to make productivity gains, especially as we enter into the AI revolution.”

More information on the ONS data can be found here.