Promise delivered: inflation halved

At the start of the year the Prime Minister laid out his five top priorities, starting with halving inflation.

New figures out today show that we have met our target to halve inflation by the end of the year. But there is more to do. 

  • The world has been grappling with high inflation, caused by the pandemic and Putin’s weaponisation of energy – which is why the Prime Minister made it his top priority to halve inflation.
  • New figures this morning show thanks to action we have taken, such as holding down energy bills and taking responsible decisions with public finances, we have halved inflation from its peak of 10.7 per cent to 4.6 per cent in October – giving families the immediate relief they need. 
  • Inflation is a tax on people’s pockets – halving it is the best thing we could do to help people’s money go further. As we took the difficult decisions, Labour’s plans would lead to higher inflation for longer, with their £28 billion borrowing plan, risking higher interest rates too.
The Conservative government is easing pressures on households and helping with the cost of living by:

Meeting our promise to the British people to halve the rate of inflation, easing pressures on families. New figures show the rate of inflation is at 4.6 per cent, down from 10.7 per cent in November 2022. This means people’s money goes further each month than it would if inflation had been allowed continue at 10% plus levels, let alone let rip as might have happened if the policies suggested by most of the opposition parties had been followed.

Inflation has been reduced by:

  • Resisting calls for additional borrowing and spending that would fuel inflation further, taking the long-term decisions for the economy. Conservatives took the difficult decisions to control public spending when inflation was at its peak – this included resisting pressure to fund above-inflation public sector pay settlements, despite Labour pushing us to do so (Source: HM Treasury, Policy Paper, 15 March 2023, link).
  • Introducing ambitious measures to help people back into work, addressing the tight labour market – one of the main domestic drivers of inflation. The UK’s tight labour market leaves us exposed to inflationary pressures – this means we had to ensure employment remained high. We delivered a package of reforms at the Spring Budget, including uncapping pensions and expanding childcare, to do this (Source: HM Treasury, Policy Paper, 15 March 2023, link).
  • Holding down energy prices, one of the main drivers of inflation, combatting Putin’s weaponisation of Europe’s energy supply. The Energy Price Guarantee held down inflation by 2.6 percentage points, whilst the Energy Bill Relief Scheme (EBRS) lowered headline inflation and the separate Energy Price Cap had a significant impact on the July inflation figures, reducing CPI inflation by 0.97 percentage points (Source: OBR, Economic and Fiscal outlook – March 2023, 15 March 2023, link).
  • Delivering tax cuts at the Spring Budget to make day-to-day costs less expensive for families, holding down inflation further. Both the alcohol duty and fuel duty freeze at the Spring Budget reduced CPI inflation by nearly 0.75 percentage points this year, according to the Office for Budget Responsibility (Source: HM Treasury, Policy Paper, 15 March 2023, link).
What would Labour policies have meant?
  • Labour are calling for billions of pounds of borrowing per year – including an inflationary £28 billion borrowing commitment.
  •  Labour have a plan to borrow £28 billion a year by the second half of their first parliament, with the Shadow Chancellor confirming Labour will take borrowing ‘up’ – the IMF estimate an increase of public expenditure by one percentage point would increase inflation by 0.5 percentage points (Source: BBC Radio 4 Today, 9 June 2023, archived; BBC Radio 4 Today, 9 October 2023, archived; IMF, On the path to policy normalisation, April 2023, link).
  • The independent IFS has agreed that this is highly inflationary. Paul Johnson, Director of the Institute for Fiscal Studies, said: ‘It is hard to say how, without tax rises, they do anything more generous than is currently planned’. Johnson then said: further borrowing could ‘potentially increase inflation, and also drive up interest rates’ (Source: iNews, 31 May 2023, link). 
  • Labour wanted weaker public sector pay restraint which would have meant higher inflation. In January 2023, Shadow Health Secretary Wes Streeting said ten per cent pay rises were ‘reasonable’ – pushing for further borrowing to fund pay deals (Source: The Times, 6 January 2023, link).



Comments

Post a Comment

Popular posts from this blog

Nick Herbert on his visit to flood hit areas of Cumbria

Please note that the post below was published more than ten year ago on 21st November 2009 Nick Herbert MP, shadow cabinet member for the Environment, Food, and Rural Affairs, was in Cumbria this morning to see the areas affected by the flooding. He writes on Conservative Home about his visit. Here is an extract. I’ve been in Cumbria today to see the areas affected by the floods. I arrived early in Keswick where I met officials from the Environment Agency. Although the river levels had fallen considerably and homes were no longer flooded, the damage to homes had been done. And the water which had got into houses wasn’t just from the river – it was foul water which had risen from the drains. I talked to fire crews who were pumping flood water back into the river, and discovered that they were from Tyne & Wear and Lancashire. They had been called in at an hours’ notice and had been working on the scene ever since, staying at a local hotel. You cannot fail to be impressed by the...
Read more

Quotes of the day 19th August 2020

Image
"Wise men profit more from fools than fools from wise men; for the wise men shun the mistakes of fools, but fools do not imitate the successes of the wise."  ( Cato the Elder , who lived 234 BC - 149 BC, quoted in "Lives" by Plutarch.) There is a similar saying by Germany's Iron Chancellor, Otto von Bismarck: Benjamin Franklin is supposed to have put the same saying in a more humorous form: "Wise men profit by the mistakes of others, while fools will not learn even from their own blunders." See also this thread on the "Quote Investigator" website . Let us all be wise and learn from the events of the last few days.
Read more

Quote of the day 24th July 2020

I was moved to put the passage below forward as a quote today when I saw a horrible post on twitter from someone writing that it was "excellent" that someone who took a different view from her about Brexit had died. I won't write which way round it was so that all the Remain supporters can assume the post was from a Brexit fanatic welcoming the death of a remainer and all the Leavers can assume it was a Remainiac welcoming one less Brexiteer. There's been plenty of nasty stuff on both sides but if you catch anyone of your own viewpoint  posting something like that who might listen to you, please do call them out on it - and point out that they're giving everyone on your side of the argument a bad name. Anyway, here's the quote from John Donne.
Read more