UK Inflation Sees a 1.1% Decrease, Government Expresses Dissatisfaction - The Top Society

UK Inflation Sees a 1.1% Decrease, Government Expresses Dissatisfaction


By :  Blessing Jonathan

The United Kingdom Office of the National Statistics, reports that inflation rate in the country  had dropped by 1.1%.

The rate fell sharply to 6.8% in July, down from 7.9% in June. The lowest inflation drop the country has experienced since the pro Russo-Ukraine war.

On Wednesday, August 16, the Consumer Prices Index (CPI) indicated that the inflation rate in April 2023 had decreased to 8.7%, down from 10.1% in March 2023. This fluctuation in the inflation rate can be attributed largely to a decrease in energy prices, which has been influenced by the ongoing conflict between Russia and Ukraine that started in 2022. The instability in energy costs has contributed to the variations in the overall inflation rate during this period.

Despite the drop in inflation rates, food prices are still high.

A UK analyst said food items prices in the country is 19% higher than it used to be in the previous years.

“The rate of inflation fell notably as the large energy price rises seen last year were not repeated this April, but was offset partially by increases in the cost of second-hand cars and cigarettes.

“However, prices in general remain substantially higher than they were this time last year, with annual food price inflation near historic highs,” the statistics agency’s chief economist Grant Fitzner said.

On Tuesday, August 15, UK Treasury Chief, Jeremy Hunt held discussions with food manufacturers over the cost of food and ways to ease pressure on households. No measures to ease the burden on households were announced.

Speaking to newsmen on Wednesday after the inflation drop announcement, Hunt said “food prices are still running too high.”

The UK government is not yet satisfied with the inflation drop rate, as it is not rapidly enough to prevent further interest rate increase from the Bank of England, who has already made increase several times since December 2021.

Ruth Gregory, a UK analyst at Capital Economics, said the increase in service sector inflation coupled with strong wage growth meant the Bank was likely to press ahead with another 0.25 percentage point rise in interest rates from 5.25% to 5.50% next month.

“There will be one more labour market and one more inflation release before the Bank of England’s September policy meeting. But with wage growth and services inflation both stronger than the Bank had expected, it seems clear that the Bank has more work to do,” she said.

According to report, UK’s inflation rate remained higher than that of the US (3.2%) and the eurozone (5.3%) in July, despite the sharp inflation drop.

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