When this Government was formed in October, inflation was at 11.1%, its highest level since 1981. Since then, and in the midst of a tough global economic climate, the inflation rate fell to 6.8% in July (source), and is forecast to fall below 3% by the end of the year (source).
When he took office, the Prime Minister made a pledge that this Government would halve inflation. The above data suggests that this goal may be achieved by the end of this year, only one year into Rishi Sunak’s premiership.
Whilst there is still more work to do to lower the cost of living, we can already see falling inflation manifest itself in small, but important ways. Most notably, the Times recently published an article that comprehensively outlines how in-shop price rises around Britain are falling sector-by-sector:
Furthermore, recent reports from the IMF and ONS are showing that economic growth is outpacing expectations in the UK.
For example, the latest figures from the ONS show that the UK economy grew 0.5 per cent in June and 0.2 per cent across Quarter 2 of this year (April to June). Across June, services grew 0.2 per cent, production 1.8 per cent, and construction 1.6 per cent. These represent an overperformance on widespread zero-growth forecasts, especially in the case of important sectors like construction.
The Government is taking action to reduce inflation and shield people from its worst effects. For example, the OBR has concluded that the peak of inflation would have been a further 2.5 percentage points higher without the Government’s energy price guarantee limiting a typical household’s annualised energy bill to £2,500 last winter.
Finally, more broadly, the IMF has upgraded the UK’s economic forecast for 2023 from a predicted 0.7 per cent contraction to a 0.4 per cent expansion. This places the UK above the likes of Germany in growth forecasts.
I know that many people continue to struggle with the cost of living, and there is more work yet to be done. But I am pleased these figures show that the UK is getting back on the right track.