Inflation Hits 3.6% in June – Still Not the End Game
While the 2021‑23 price rollercoaster is winding down, the UK’s inflation curve is still a bit of a tumbleweed. The latest figure – 3.6% YoY in June – reminds us that the war on rising prices is far from over, and many households are still caught in the squeeze on food, energy and everyday services.
Bank of England: Slow‑Mo, But We Still Bet on a Rate Cut
- Interest‑rate outlook – The BoE is expected to tread carefully, but the next Monetary Policy Committee meeting on 7 August should see a cut in rates.
- Why a cut? – Even with inflation above the coveted 2% target, the labour market’s cooling – slower wage growth and shrinking vacancies – signals a likely downturn in inflation next year.
- What the MPC will say – They’ll argue that the upward pressure is easing, making a rate reduction justifiable.
Triple Lock Trouble: The Pension Boat in Turbulent Waters
The OBR’s latest July report shines a light on the growing cost of the triple‑lock system that guarantees state pensions rise by the highest among CPI inflation, average earnings growth, or 2.5%. Sticky inflation is the name of the game, and it keeps the cost climbing.
With GDP growth barely at 1% across the year, the government’s wiggle room is shrinking faster than the tips of a freshly painted refrigerator door.
Budget 2025: The Ultimate Tightrope Walk
- Tariff dilemma – The Chancellor must juggle tax revenues against public spend. Big cuts in pensions? Heavy tax hikes? Or a daring strategy that breaks her own fiscal leash?
- Political stakes – Breaking her fiscal promises could undermine public trust, but sticking to them might mean raising taxes if the budget can’t stretch any further.
- What’s on the table? – A chancellor who’s steadfast about fiscal rules faces a tough choice: play it safe, crack the budget, or pivot to aggressive cuts.
In short, the road to the Autumn Budget is ugly, complicated, and full of the kind of political drama that makes drama series seem tame. Grab your tea, because you’ll want to keep an eye on this next chapter.
