Winter inflation warning puts Reeves’ economic growth plan at risk
Rachel Reeves was given an inflation warning by the UK Bank because it reduced interest rates to the lowest level in two years, but it estimates sharp cost increases for months due to higher food prices.
Since interest rates fell to four percent, there was relief for the debtors.
However, the bank said that the title inflation will accelerate four percent in September, and that food inflation will reach 5.5 percent between Christmas now and Christmas – stuck in home budgets.
As a result, Andrew Bailey, the governor of the bank, pointed out that the interest rates will fall slower in the coming months and that they are “still down the road ,, but the changes should be“ slow and careful ”.
Since the rate of ratio could be protected from inflation, the decision of the decision was divided and had to get the second vote for the first time in the history of breaking the dead end.
Estimates, Sir Keir Starmer’s budget of this autumn will “make people feel better” to commit more pressure on the chancellor shortly after 24 hours.
Ms. Reeves welcomed the rate cut by saying that it would help to reduce mortgage and credit costs for families and businesses ”.
However, the leading economists said that they might have to tear their financial rules to raise taxes, reduce public expenditures or fill billions of black holes.
In addition, the former workers’ Prime Minister Gordon Brown, who proposed to receive defense expenditures from borrowing rules to finance the abolition of the benefit limit with two children and to release the economic ‘ceiling gap’.
However, Tories said that the rise of the rise is “and reckless borrowing pushes inflation too much on the target”.
In addition to an announcement of a deduction in interest rates, the UK Bank said that the national insurance raid of £ 25 billion increases food prices.
Due to the increase in minimum wages and the effect of the increase in national insurance contributions (NICS), higher wage costs contribute to food inflation.
The “relatively high personnel ratio” in the field of food manufacturing and retail is paid in or near the national life fee of 6.7% in April.
“It is also likely to affect the general labor costs of supermarkets from the low threshold that employers began to pay NICs, because a relatively high supermarket staff is used part -time.”
Most of the wage costs and some of the NICS rise were transferred to consumers by increasing the prices of approximately 1 to 2 percent and customers faced more this year.
The Bank’s latest monetary policy report said that the controversial NICS movement “focuses on growth”.
Business Chiefs also expressed their concerns about the Bank regarding other government policies, including Deputy Prime Minister Angela Rayner’s employment rights law.
British Retail Consortium General Manager Helen Dickinson said: “The government policy will add 7 billion pounds to retailer costs from higher employment costs to the introduction of a new packaging tax.
“Food prices are already steadily climbing and BRC warned that it is just the beginning.
“If the autumn budget descends to the shoulders of the retailers once again, then it will only serve to admire the flames of food inflation, and the poor families will be shot most by the treasury’s decisions.”
“Today, there was bad news from the UK Bank to Chancellor, because their forecasts remained more pessimistic than the budget responsibility for growth, and claimed that bad news came in the autumn budget.
“Bank ratio is currently 4 percent-the lowest level since 2023. This will be widely welcomed by mortgages, while approximately 700,000 families will see that repayments have increased as five-year fixed-rate agreements make.
He continued: “For families struggling with the cost of living, there was bad news from the Bank of England: Inflation will be higher than expected before, food inflation is increasing in the coming months and real wage growth will hit a brick wall this year.”
