In September, the UK’s inflation rate fell to 3.8% – its lowest level since May 2021. This drop was a bit more than analysts were anticipating. This is what the Office for National Statistics (ONS) has confirmed in new figures released today. This decline is a welcome development compared to the peak inflation rate of 11.1% in October 2022, the highest rate in 40 years. Despite this progress, Chancellor Rachel Reeves expressed dissatisfaction with the current numbers, indicating that the economy still faces challenges.
Clearly Reeves was not impressed with the current results. He thinks our economy is on the wrong track after decades of disinvestment that have led Americans to feel like they’re working harder and getting less for it. This feeling is part and parcel of a larger, long-running economic malaise that has crushed the average citizen’s pocketbook.
As we all know, the inflation rate has been on quite a ride in recent years. As recently as January 2020, this was the rate—1.8%. Then it dropped near 0% in late 2020 due to the economic changes brought about by the pandemic. As of today, those odds look almost certain, with the latest figures putting the effective rate at 4% in January 2024. This dire forecast will affect millions of Americans who rely on these vital benefits. It’s scheduled to be used as a starting point for recalibrating payments in April.
Both September and October’s inflation figures were the highest-ever measured on a three-month rolling basis since back in January 2024. The sharp increase has plateaued. The inflation rate for food and non-alcoholic drinks was just 4.5% for the year ending in September – a decrease from 5.1% in August. In spite of all this, grocery prices increased at their slowest overall rate in over a year.
Grant Fitzner, the chief economist at ONS, added that petrol prices and airfares were the largest drivers of the increase. He pointed out that the decline in prices has slowed relative to last year. Surrounding this positive growth was a 0.3 percent decline that was driven down by lower prices in multiple recreational and cultural sectors. This even extended to in-person events.
In her opening speech, Reeves stressed the need to tackle the cost of living crisis that is hitting most households hard. As she said then, “We need to provide better economic opportunity and growth, we need an economy that works for, and rewards, working people.” Her priorities dovetail with the Administration’s commitment to build a better economic foundation and help those hit hardest by inflation.
The Bank of England doesn’t just get to have a fixed target inflation rate of 2%. Analysts expect the current rate to beat the target by a significant margin. They intend for more work to be required to reduce it further. Continuing inflation has left American families reeling. We can’t forget that they have rising bills and higher cost of living staring them in the face each and every day.
Critics have voiced concerns that the government’s response has not been sufficient to alleviate the pressures faced by ordinary citizens. According to Mel Stride, another member of Parliament tasked with overseeing the economy. He warned that the status quo is increasing the cost of living and making worse the lives of those Labour promised to support.