"After more than three years of the cost of living crisis, Rachel Reeves is well aware of the harm inflation is inflicting on UK households and on Labour's share of the vote. While figures out last week suggested that the annual rate of price increases may now have peaked, the chancellor focused on its continuing human impact, saying: For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out. That needs to change."
"So what are the chancellor's levers for mitigating a UK inflation rate that the International Monetary Fund has warned is on a path to be the highest in the G7 group of countries this year and next? Millions of households are suffering a huge financial hangover from soaring energy prices following Russia's 2022 invasion of Ukraine. Gas prices have fallen over the last 18 months, but remain two-thirds higher than they were before 2020."
Inflation has harmed UK households and eroded Labour's share of the vote. Recent figures suggest the annual rate of price increases may have peaked, but the human impact remains severe and requires change. The chancellor has promised a range of budget measures to bear down on rising costs and to counteract expectations of tax rises to close an anticipated 20bn-30bn spending gap. The government must support the Bank of England in bringing down inflation, with a likely focus on administered prices such as utility bills and transport fares. Energy costs remain much higher than pre-2020 levels, and cutting the 5% VAT on energy to zero could save around £83 a year on the average bill and reduce headline inflation by roughly 0.2 percentage points.
Read at www.theguardian.com
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