Keeping with the Bank of England’s target rate of 2%, the latest official figures show that inflation in the UK stayed still in June. During the summer sales, apparel reductions mitigated the impact of hotels’ exorbitant price hikes. Both May and June saw inflation rates of 2% in the year leading up to June.
The cost of living is still going up
But the rate is acceptable to the central bank, so that’s good news. This follows about three years of inflation that was higher than the desired amount, which affected household budgets. The most recent month saw a decline in the cost of footwear and clothing, while food and drink inflation has dropped sharply from its prior year-high levels. The head economist at the Office of National Statistics (ONS), Grant Fitzner, brought up a “higher level of discounting” during an interview with the BBC’s Today program.
Another finding was that used car prices fell, though not quite as much as the prior year over the same time frame. Nonetheless, thanks to upward pressure, the general inflation rate rose when hotel and restaurant costs rose over a year ago. * How soon are prices going higher, according to the UK inflation rate? According to the Office of National Statistics (ONS), hotel rates rose 8.8 percent from the previous month, while restaurant and cafe prices rose 0.3 percent. On top of that, it proved that movie tickets, theater tickets, concert tickets, and vacation packages were all becoming more expensive. However, other industries, including the service industry (which includes everything from hair salons to restaurants), still have issues with price spikes.
This may prompt Bank of England officials to consider when it might be best to begin lowering interest rates.
According to Darren Jones, the recently appointed chief secretary to the Treasury, family budgets across the UK are still under pressure. We have an obligation to deal with the fallout of the economic chaos and carelessness that lasted for fourteen years. So that we can rebuild Britain and ensure that every part of the country benefits, this administration is currently making the tough decisions that are need to fix the foundations.
The Bank of England raised its base rate to 5.25%, a level not seen in sixteen years.
Aiming to stem the tide of growing inflation, the Bank of England raised its base rate to 5.25%, a level not seen in sixteen years. This hike has a multiplicative effect on mortgage rates and other borrowing expenses.
The Bank of England can be found online if you’re interested in reading up on them. The MPC, the body in charge of voting on the rate, has kept interest rates at this level for quite a while. Nevertheless, many experts have predicted that they will lower the rate at the upcoming vote on August 1st! Greenwich is a neighborhood in southeast London, and Leanne Morgan and her husband Gareth were able to buy a house there in 2016 when borrowing rates were much cheaper. Their new rate is slightly over 4%, and their five-year fixed mortgage deal ended this month. This has resulted in a £5,200 rise to their yearly mortgage payments.
Citizens are expressing their grievances over the inflation
Mrs. Morgan said that they were having trouble affording the extracurricular activities that their three older children want due to the higher mortgage payments. Not being able to enjoy family trips has prevented us from doing a lot of fun activities with the kids. Because of this, I am more selective about the grocery stores I frequent, and I am continuously looking for ways to save costs. All of us sit down, talk about the expenses, figure out where we can cut back, and look at a budget. On the flip side, she was hopeful that the UK economy had hit rock bottom and that better times were ahead. “I think sometimes the doom and gloom that we talk about can actually make us feel very negative….It you can feel hopeless,” she replied. “But if we have a good conversation about what is possible, and working with what we’ve got, we can have a better conversation about it,” she concluded her remarks.
How can this be solved?
There was also no change to the core inflation indicators that the Bank of England is closely monitoring, as shown by the most recent figures. For example, core inflation, which accounts for less stable items like energy prices, stayed at 3.5%, while inflation in the services sector stayed at 5.7%. The service sector’s core inflation rate remained steady as well. It could give the Bank of England committee some fuel for thought when they decide on interest rates next month, along with a number of other more encouraging economic data that have been issued recently. On Tuesday, the International Monetary Fund (IMF) released a list that would force certain countries, like the UK, to keep interest rates “higher for even longer” than expected in order to rein in inflation. Rate cuts, which the financial markets are expecting to start on August 1st, will help bring down fixed mortgage rates. Recent data suggests a well-rounded verdict is likely to be handed out.