British Prime Minister Rishi Sunak expressed joy over the recent drop in inflation, calling it “good news for the UK” just in time for the Christmas season. Official statistics from the Office for National Statistics (ONS) revealed that inflation has decreased to 3.9%, marking the lowest level in over two years. Sunak had prioritized halving inflation at the beginning of the year when it stood at around 11%.
In a social media post, Sunak highlighted the positive trend, noting that a year ago, inflation was at 11.1%, and now it has dropped to 3.9%. The ONS attributed the decline in inflation to falling petrol prices and slowing prices for food and household goods. However, experts caution that despite this relief, many households may not feel an immediate improvement in their financial situation, given persistently high energy bills and borrowing costs.
Chancellor Jeremy Hunt acknowledged the success of the government’s plan, stating, “Inflation has more than halved, from over 11 percent to 3.9 percent – so we can see the plan is working.” He emphasized the easing of inflationary pressures and the positive impact of recent business tax cuts on the path to healthy sustainable growth. Hunt also hinted at the potential for increased wages as inflation is brought under control.
This development is seen as an early Christmas present for the Sunak-led government, which has faced challenges in meeting various targets set for the year. Despite this positive news, attention now turns to the Bank of England’s potential interest rate cuts early next year to further address high borrowing costs. The central bank has raised interest rates 14 times since December 2021, with markets anticipating a drop below 4 percent by the end of next year and a possible start of the loosening cycle in the first half of 2024.