The rate of inflation in the United Kingdom has unexpectedly eased to 6.7%, confounding the predictions of economists who anticipated a further increase. The Office for National Statistics (ONS) reported that the consumer prices index (CPI) measure decelerated in the 12 months leading up to August, down from the 6.8% figure reported the previous month. This surprising development was attributed to food prices rising at a slower pace compared to August 2022.
Economists had been closely monitoring inflation as it climbed steadily in recent months, driven in part by surging global oil costs, which had a visible impact on fuel prices. The Resolution Foundation, a think tank focused on improving living standards, noted that the lower-than-expected inflation figures provide a form of “payback” after several months of disappointing economic data.
James Smith, the Research Director at the Resolution Foundation, commented, “The Bank of England has finally received some ‘inflation karma’ as price pressures eased considerably in August. This will strengthen the case that the Bank’s fourteen consecutive interest rate rises are now showing clear signs of putting downward pressure on inflation, and that its rate-rising cycle will soon end.”
The organisation also pointed out that while inflation remains stubbornly high, the fact that it is moving in a downward direction is a positive sign for the British economy.
In response to reports of potential changes to environmental pledges, Home Secretary Suella Braverman emphasised that the government’s commitment to achieving net zero emissions by 2050 remains intact. However, she acknowledged that the government is considering delaying the ban on the sale of new vehicles with internal combustion engines (ICE) from 2030 to 2035 and revising plans to phase out gas boilers by 2035. Braverman stressed the need to prioritise economic growth alongside environmental goals.
In related news, millions of low-income households in the UK are set to receive cost-of-living payments between October 31 and November 19. Eight million people on means-tested benefits, including Universal Credit, will receive £300 directly, marking the second of three planned instalments that will eventually total £900. These payments aim to help vulnerable households cope with the impact of rising living costs. Work and Pensions Secretary Mel Stride cautioned the public about potential scams related to these payments and urged vigilance against scammers seeking personal information.
