Inflation’s Got a New Plot Twist in the UK
In June, the UK’s price pulse jumped to 3.6% year‑on‑year. Though it’s flatter than the 2021‑23 roller‑coaster, the inflation saga is far from a calm sea. Households are still watching their wallets tighten, especially when it comes to food, energy, and everyday services.
Bank of England’s Next Move
- The Bank of England is being cautiously swift, planning its next rate tweak on 7 August.
- Even with inflation still above the proud 2% target, the labour market is easing—wages are growing slower, and job openings are shrinking.
- It’s a sign that MPC expects prices to start dipping in the new year, giving them a good reason to lower rates.
The Budget Drama: A Tale of Sacrifice or Tax Hikes?
Meanwhile, the Chancellor’s journey to the autumn budget is getting steeper.
- The OBR’s July report shows the triple‑lock on state pension costs could spiral. The lock ties pension rises to the highest of CPI inflation, wage growth, or 2.5%. Sticky inflation keeps the cost climbing.
- With GDP barely nudging 1% this year, the government’s wiggle room is almost zero.
- The budget dilemma: cut spending (pensions, etc.), raise taxes, or breach the self‑imposed fiscal rules that the Chancellor has sworn to uphold.
Notice it, friends—will the Chancellor shake up her pledge to keep tax rates steady, or will she defiantly tighten the budget wheel? The chapter that’s about to unfold could be a story of fiscal heroics, or a tax‑upgrade plot twist.
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