The Bank of England has recently cut interest rates to 4% but cautioned against rising inflation, particularly due to increasing food prices. Chancellor Rachel Reeves has been warned about a potential £50 billion gap in government finances, with her policies contributing to higher costs for consumers. As inflation is projected to rise to 4% by September, the Bank's governor indicated that changes in interest rates would be implemented cautiously to mitigate potential inflationary pressures. Inflation on food is expected to hit 5.5% during the holiday season, putting additional strain on household budgets.
Rachel Reeves has been alerted by the Bank of England regarding an inflation forecast tied to rising food prices, which also affects household budgets.
The Bank of England recently reduced interest rates to 4%, but warned of potential inflation increases due to national insurance hikes and minimum wage rises.
Amid concerns about inflation possibly being accelerated by the interest rate cut, the Bank's governor indicated that adjustments would be gradual.
The Bank predicts headline inflation could reach 4% by September, with food inflation potentially hitting 5.5% between now and Christmas.
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