LONDON, June 19 Reuters British inflation returned to its 2 target in May for the first time in nearly three years, data showed on Wednesday, but underlying price pressures remained strong, meaning the Bank of England is likely to wait longer before cutting interest rates.

The fall in headline inflation in May will be welcomed by both Prime Minister Rishi Sunak and the BoE but likely has come too late either to turn around Sunak39;s fortunes at next month39;s election or to prompt a BoE rate cut on Thursday.

The data showed services price inflation which the BoE thinks gives a better picture of mediumterm inflation risks was 5.7. That was down from 5.9 in April but not as big a drop as the 5.5 that economists had expected.

Sterling rose modestly against the U.S. dollar after the data.

Ratesetters will still need to weigh the fall in headline inflation against signs that domestic price pressures, such as elevated pay growth, are proving slower to come down, Martin Sartorius, principal economist at the Confederation of British Industry, said, predicting a first rate cut in August.

The drop in annual consumer price inflation from April39;s 2.3 reading was in line with economists39; median expectation in a Reuters poll and marks a sharp decline from the 41year high of 11.1 reached in October 2022.

The fall has been sharper than in the euro zone or the United States, where consumer price inflation in May was 2.6 and 3.3 respectively, belying concerns a year ago that…