Conservative response to inflation news
MP, Shadow Chancellor of the Exchequer, said:
“Inflation remains higher than when Labour took office, and the
Bank of England expect it to rise over the coming year.
“We left Labour with inflation bang on target. But since their
no-strings-attached union payouts, record tax rises and borrowing
splurge, they have pushed up the cost of living.
“The Chancellor's choices have saddled the country with higher
inflation for longer. Unless she takes urgent action at
her emergency budget today, working families will continue
to pay the price."
ENDS
Notes to Editors
Labour inherited inflation at the Bank of England's
target:
-
Labour inherited inflation at 2.0 per cent.
Having inherited inflation bang on the 2.0 per cent target,
inflation has increased above the Bank of England's target, on
Labour's watch (Office for National Statistics, Consumer
price inflation, UK: January 2025, 18 February 2025,
link).
The Bank of England forecast the rate of inflation to
rise higher:
-
The Bank of England said that domestic factors, such as
labour costs, had been a driver of higher
inflation.‘Core consumer goods price inflation had
risen to 1.6 per cent in January, alongside a material increase
in food consumer price inflation, to 3.3 per cent Alongside
external shocks, it was possible that domestic factors, such as
labour costs, had been a driver of the recent pickup in core
consumer goods and food prices' (Bank of England, Bank Rate
maintained at 4.5 per cent – March 2025, 20 March
2025,link).
-
The Bank of England said its Market Participants Survey
increased its inflation expectation. ‘The median
respondent to the Bank's latest Market Participants Survey
(MaPS) expected CPI inflation to peak at around 3.5 per cent in
Q3 this year, an increase relative to expectations in the
previous survey. Respondents continued to expect inflation to
be at the 2 per cent target at the three-year horizon. There
had been little change in medium-term UK financial market
inflation compensation measures.' (Bank of England, Bank
Rate maintained at 4.5 per cent – March 2025, 20 March
2025, link).
-
The Bank of England said inflation would rise to 3.8
per cent in Q3 2025. ‘CPI inflation was expected to
rise further in the near term, to around 3¾ per cent in 2025
Q3. This expectation was little changed from the projection
made at the time of the February Report. Upside news to
non-energy consumer goods prices had been offset by downside
news to energy prices from downward moves in sterling oil and
gas price curves relative to the assumptions in the February
Report projection' (Bank of England, Bank Rate maintained
at 4.5 per cent – March 2025, 20 March 2025, link).
Bank must prioritise
interest rate cuts to boost growth, says TUC
Commenting on February CPI inflation
at 2.8 per cent, TUC General Secretary
Paul Nowak
said:
“The biggest challenge facing our
economy is low growth.
“After the worst slump in living
standards in 200 years, households and businesses are still being
hit by a sustained period of high interest rates – and it's
holding back
growth.
“Evidence from around the world shows
that higher growth has been facilitated by higher consumer
spending and achieved alongside low
inflation.
“While all eyes will be on the
chancellor today, the Bank of England also has a key role to play
in reviving growth. That's why the Bank should cut interest rates
at the start of next month – and continue to throughout the
year.
“Lower interest rates will help ease
the pressure on households, businesses and government borrowing.
They will mean more money in working people's pockets to spend on
our high streets, and more money for firms so that they feel
confident to invest.”
ENDS
Notes to
editors:
- Stronger growth is not
causing inflation – TUC analysis of OECD
data
New analysis of OECD data – published
by the TUC – finds that there is no international evidence of
higher consumer spending and faster growth leading to higher
inflation over the last three years.
The analysis looks at data on consumer
spending, GDP growth and inflation for 36 OECD countries across
the three years from Q3 2021 to Q3
2024.
This time span covers the period when
the global trend for interest rate increases began in late 2021
up to the most recent available data.
