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).


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