The sharp drop in the consumer prices index to 1.7%, down from 2.2%, represents the first time inflation has dipped below the 2% target since April 2021, providing a significant boost to Rachel Reeves ahead of the upcoming budget. Lower air fares and petrol prices were the key factors driving this unexpected decline. This positive economic news arrives just in time to support Labour's strategy focused on growth and public service investment.
Darren Jones, the chief secretary to the Treasury, expressed optimism, stating, 'It will be welcome news for millions of families that inflation is below 2%. However, there is still more to do to protect working people, which is why we are focused on bringing back growth and restoring economic stability to deliver on the promise of change.' This reflects a commitment to address ongoing economic challenges.
As inflation figures improve, the anticipation of an interest rate cut by the Bank of England adds to the sentiment of reassurance among households. Economists predict a quarter-point reduction in borrowing costs to 4.75% in November, suggesting that lower inflation rates may ease the financial pressure on both consumers and businesses.
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