Rachel Reeves suffered another huge blow today as inflation defied predictions to rise.
The headline CPI rate had been expected to stay on hold at 3.4 per cent in the year to June, but instead increased to 3.6 per cent.
The increase heaps woe on the Chancellor as she struggles to balance the books and get the economy going, casting doubt on the prospects for the Bank of England cutting interest rates quickly.
Worryingly for the Treasury, closely-watched CPI core inflation – excluding energy, food, alcohol, and tobacco – was up from 3.5 per cent to 3.7 per cent.
Ms Reeves did not directly address the increase in a statement, saying she ‘knows working people are still struggling with the cost of living‘ and is determined to ‘put more money into people’s pockets’.
The headline CPI rate had been expected to stay on hold at 3.4 per cent in the year to June, but instead increased to 3.6 per cent
Rachel Reeves did not directly address the increase in a statement, saying she ‘knows working people are still struggling with the cost of living’ and is determined to ‘put more money into people’s pockets’
ONS Acting Chief Economist Richard Heys said: ‘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.
‘Food price inflation has increased for the third consecutive month to its highest annual rate since February of last year. However, it remains well below the peak seen in early 2023.’
Ms Reeves said: ‘I know working people are still struggling with the cost of living.
‘That is why we have already taken action by increasing the national minimum wage for three million workers, rolling out free breakfast clubs in every primary school and extending the £3 bus far cap.
‘But there is more to do and I’m determined we deliver on our Plan for Change to put more money into people’s pockets.’
Shadow chancellor Mel Stride said: ‘This morning’s news that inflation remains well above the 2 per cent target is deeply worrying for families.
‘Labour’s decision to tax jobs and ramp up borrowing is killing growth and stoking inflation – making every day essentials more expensive – and because Labour are too weak to take tough choices on spending, more tax rises are on the way, leaving families facing ever-rising costs.
