Recently U.K. inflation has jumped to 3.6% in June, shocking most economists. As U.K. Finance Minister Rachel Reeves said, the pain is “still being felt by working people.” They still have to deal with the challenge of the high cost of living. She reiterated the government’s commitment to addressing these challenges. In her response, she highlighted that much more needs to be done to ease the financial squeeze on consumers.
The Office for National Statistics (ONS) has today released their latest data. It helps explain why June’s core inflation ticked up to an annual rate of 3.7%, up from 3.5% in May. Core inflation excludes the more volatile prices of energy, food, alcohol and tobacco. This method provides us with a deeper look at those underlying price trends. Richard Heys, the acting chief economist at ONS, noted that inflation had increased in recent months. He pointed out that motor fuel prices actually fell a bit less, particularly considering a much larger decline for the same month last year.
Food price inflation, in particular, has been troubling. It implies that it has shot up for the third month in a row. Currently, the annual rate has reached its highest point since last February of 2022. Even at that level, it’s still far short from the record highs seen earlier in 2023. This persistent and rapid increase in food prices is playing a critical role in the pain that consumers are experiencing.
In the immediate aftermath of this inflation release, the British pound appreciated modestly, gaining nearly 0.2% against the dollar. Shortly after the data release, it got as high as $1.3406.
“Working people are still struggling with the cost of living.” – U.K. Finance Minister Rachel Reeves
The government’s attempt to pay down these economic pressures continues to be an issue Reeves stands by. She continues to spotlight the importance of developing policies that invest in communities most affected by escalating inflation. That’s particularly important in critical sectors such as food and fuel.
“Inflation ticked up in June driven mainly by motor fuel prices which fell only slightly, compared with a much larger decrease at this time last year.” – Richard Heys, acting chief economist at ONS
Debate continues over how to most effectively address inflation and provide relief to consumers. Reeves and Heys do a great job of explaining how these economic drivers are inextricably linked, and how they impact the daily lives of Americans.