UK, inflation, CPI
In September the UK inflation rate held at 3.8%. That’s the highest rate overall since last September, and the same rate was recorded in July and in August. This figure comes as the country faces their own economic challenges, particularly the cost of living crisis. Chancellor Rachel Reeves expressed dissatisfaction with these inflation numbers, emphasizing the need for stronger economic growth that benefits working people.
The latest data from the country’s Office for National Statistics (ONS) indicates that inflation is now far cry from its recent high of 11.1% in October 2022. It hasn’t gone any lower than this since the beginning of 2020 when it was just a touch shy of zero rates. The last few months have witnessed inflation numbers remain at or close to record levels since January 2024. Under those troubling ONS statistics, the real rate was 4% at the time.
Chancellor Reeves noted, “I am not satisfied with these numbers. For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out.” She proposed measures to alleviate the effect on raising kids. These families, among the most vulnerable in the country, are already dealing with soaring energy bills and a cost of living crisis.
Shadow Chancellor Mel Stride voiced similar sentiments. He claimed that inflation was raising the cost of living and penalising those that Labour had pledged to defend. The current economic crisis has become a major concern for lawmakers and Americans alike. Starting next year, many of the tens of millions of people who rely on these benefits will start receiving monthly payments 3.8% higher than previously scheduled.
Prices for food and non-alcoholic drinks have fallen in the last 2 months. This is an important reversal given the pervasive inflation narrative. The combined inflation rate for these categories fell from 5.1% in August to 4.5% in September. If implemented, this change would be a sign that grocery prices are increasing at their slowest pace in more than a year.
Fascinating discussion with Chief Economist @ONS, Grant Fitzner about the factors driving this change. He stated, “The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year.” He pointed out that dropping prices for entertainment and live cultural production largely made up for this. The effect on the whole was still there.
That larger economic picture is indicative of a year that has been volatile in many ways for inflation. In January of 2020, inflation was already at 1.8%, showing that this was an increase even over those two years. The recent stability at 3.8% indicates that inflationary pressures are still very much alive, but not building towards past levels of infamy.
As the government and economists continue to analyze these trends, the focus remains on how to address the challenges faced by households across the nation. Those last two data points illustrate an extremely complex and often contradictory relationship between high-impact economic factors and consumer experiences.