Inflation down to 3.9 Percent















The Conservative government has continued to deliver on our promise to reduce inflation, giving families the immediate relief they need.

  • When Rishi Sunak become Prime Minister, inflation was running at over 10%, which is why he made it his top priority to half this.
  • New figures show the rate of inflation is at 3.9 per cent and is at its lowest point since 2021.
  • Inflation has continued to fall - it was 4.6% in the twelve months to September, which met the promise to halve inflation, but fell again to 3.9% in the twelve months to October.
  • This is still too high, but it represents real progress and means that for many more households the rise in their income will exceed the rate at which inflation takes away the value of their money.
  • 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.
  • Whilst there is more to do, the reduction of inflation to 3.9% will put everyone in a far stronger position than they would be if inflation had not been cut, and especially it will ease people’s mortgage costs by reducing the risk of a further rise in interest rates, which would have been almost inevitable if inflation had remained high.


The Conservative government is working to keep inflation down by:

  • Resisting calls for additional borrowing and spending that would fuel inflation further, taking the long-term decisions for the economy. We 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. (Source: HM Treasury, Spring Budget, 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 and the Autumn Statement, including uncapping pensions and expanding childcare, to do this (Source: HM Treasury, Spring Budget, 15 March 2023, link; HM Treasury, Autumn Statement 2023, 22 November 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 (HM Treasury, Spring Budget, 15 March 2023,  link).
  • Delivering a package at the Autumn Statement that ensures inflation will fall right across the forecast period, taking the long-term decisions to strengthen the economy. The OBR confirmed the measures we took at the Autumn Statement will continue to ensure inflation lowers over the forecast period, meaning we have taken the difficult decisions to offer families long-term relief and to strengthen the economy (HM Treasury, Autumn Statement 2023, 22 November 2023,  link).

What of the alternative?


The Director of the Institute for Fiscal Studies, Paul Johnson, said Labour’s policy to borrow £28 billion more every year means ‘potentially increasing inflation, and also drives up interest rates’. Mr Johnson argued that given high inflation and rising interest rates, a looser stance would be risky – saying: “It is much harder to argue you could do significant additional borrowing because additional borrowing both pumps more money into the economy, potentially increasing inflation, and also drives up interest rates”’ (iNews, 31 May 2023, emphasis added,  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