Today we learned that consumer price inflation rose again in July, to 3.8%. That was higher than both June’s 3.6% and the 3.7% analysts had expected. Inflation is now at the highest level since January 2024, when Rishi Sunak’s Tories were still in power. Sunak took the blame then. Now it’s Reeves’s turn to carry the can.
Inflation is expected to climb again next month to 4%. While the Chancellor can’t do much about soaring petrol, food prices and air fares, her disastrous policies have only added fuel to the inflationary fire and made Britons feel poorer. Especially pensioners living on fixed incomes.
Food and fuel prices are rising at speed, and these two essentials swallow a disproportionate amount of pensioner incomes. For them, the cost-of-living crisis is far from over.
Reeves’s fingerprints are all over today’s numbers.
Much of today’s pain has been stoked by her own fiscal incontinence. Reeves chose to grant generous public sector pay awards, pushing up wages while productivity goes backwards.
The Chancellor insists she is boosting living standards, but legislating for higher pay without the productivity to support it simply feeds inflation.
She also increased employers’ National Insurance contributions in her Budget, raising costs for businesses that are now passing them on to consumers. At the same time, she hiked the statutory minimum wage by an inflation-busting 6.7%. Another cost to pass on.
Labour cannot claim the credit for rising wages without accepting the consequences.
Higher inflation is not just squeezing households, it is also hitting the government’s own finances. In June, the monthly deficit was a massive £20.7billion, far higher than forecast.
Alarmingly, three-quarters of that mighty sum didn’t go on schools or hospitals, but interest payments on Britain’s colossal debt pile.
Today’s inflation surprise has driven gilt yields to fresh highs, driving debt servicing costs still further.
The more borrowing costs rise, the more pressure she’ll be under to hike taxes to plug her £50billion black hole.
Pensioners will be first in the firing line again, as she takes aim at their savings, inheritances and now potentially even their homes. We’re looking at a second Budget horrorshow. Once again, the public will pay for the Chancellor’s mistakes. But especially pensioners.
