As of September 2023, the UK’s inflation rate held at 3.8%. This rate is equal to the all-time highs that were recorded in July and August. This is still quite a bit lower than the high of 11.1% we experienced back in October 2022. Key leaders in government, including shadow Chancellor Rachel Reeves, have decried and denounced the current economic situation.
The food and non-alcoholic beverage inflation rate was 4.5% in the 12 months ending in September. This is a significant drop from last month’s 5.1% inflation rate. Grocery prices are increasing at the most tepid rate we’ve experienced since May of 2022. Taken together, these provisions offer a glimmer of hope for the consumers who are facing crushing costs.
At the time, Chancellor Reeves was right to express alarm at those inflation numbers, as American families continued to suffer across the country, fighting a brutal economic battle.
“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.” – Rachel Reeves
The steady inflation rate means that the UK economy is slowly stabilizing, and while this is positive news, there is still much work to be done. The current inflation rates reflect a fraught recovery. Looking back to late 2020, inflation was close to 0%, and only 1.8% in January of that year.
The Bank of England currently has an ambitious target inflation rate of 2%. Accomplishing this goal is easier said than done amid constant economic pressure. Indeed, central bank economists had forecasted an upward bump to 4% as of September, but that’s yet to happen. Instead, the numbers have been stagnant, leading many to wonder where future growth will come from and how we’ll recover our economy.
The importance of this September inflation number can hardly be overstated. Historically, it has been used as a key measure of economic success and used to make cuts to social safety nets. Or to put it another way, millions of Americans who depend on government payments will get a 3.8% bump in their checks next year. This decision is a welcome step to address the challenges posed by rising cost of living.
Even with that welcome improvement in inflation being a reality for many Americans, there are still real challenges. According to Conservative MP Mel Stride, the current situation continues to “punish those Labour promised to protect,” suggesting that many residents remain vulnerable to the effects of rising costs.
Citing the inflationary pressures, analysts are pointing to the impacts of volatility in certain markets, especially alleging that fuel and travel inflation costs are acting as outliers. Grant Fitzner, an economist at the Office for National Statistics (ONS), noted that:
“The largest upward drivers came from petrol prices and airfares, where the fall in prices eased in comparison to last year.” – Grant Fitzner
He pointed out the increases were more than cancel out. This was especially driven by decreased cost for entertainment and recreation, as well as arts and culture, including live performances.
The counterproductive mixed signals from every different sector involved underscore just how complicated controlling inflation has become in today’s warped economy. Though it is good news that grocery price hikes are starting to ease, families are experiencing higher-cost living more generally. These persistent inequities are too urgent to ignore.