Recent drops in inflation and positive GDP data could suggest the UK is emerging from recession. This development may lead Bank of England officials to debate the timing of interest rate cuts, raising the question of “how soon is too soon?”

Myron Jobson, senior personal finance analyst at interactive investor, said: “High interest rates have made it more expensive for people to buy a house and expand a business, which can weigh on an economy over time.

“Bank of England policymakers have a delicate balancing act to strike of bringing inflation under control without crushing economic growth and curtailing widespread job losses and a deep recession.

“Great progress has been made in the battle against inflation, but it is not yet won. While the light at the end of the long and winding tunnel is shining ever brighter, inflation remains above the Bank of England’s two percent target. As such, Bank of England policymakers want to avoid cutting the base rate too soon, only to find out that inflation is not fully quashed.”

He added: “Inflation is still expected to continue to moderate in the coming months. But it is important to remember that we each have a personal inflation number that could be far higher than the catch-all headline figure.

“As such, while headline inflation is cooling, it remains important to keep a keen eye on your finances and make adjustments if needed to maintain financial resilience.”