UK inflation reached 3.6% in June, indicating ongoing economic pressures for households facing high costs for essentials. The Bank of England is anticipated to cut interest rates in August, despite inflation exceeding the 2% target. A softening labour market suggests a forecast of decreasing inflation in the new year. The rising cost of the state pension under the triple lock and sluggish economic growth creates challenges for the Chancellor ahead of the Autumn Budget, with potential tax rises or spending cuts necessary to address the fiscal situation.
The year-on-year inflation in the UK rose to 3.6% in June, a reminder that the battle against inflation is far from over for many households.
Despite inflation remaining above the official 2% target, a softening labour market suggests inflation may begin to fall as the new year approaches.
Concerns over the sustainability of the state pension triple lock are mounting, given that sticky inflation threatens to keep the cost rising.
The Chancellor faces a dilemma in reconciling tax revenues and public expenditure, raising the prospect of tax increases or aggressive cost-cutting.
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