Rachel Reeves has said the government must act to ease the pressure of inflation on households, weeks after official figures suggested the annual rate of price increases may have peaked. The chancellor acknowledged the continuing human toll of the cost of living crisis, which has lasted more than three years and is also weighing on Labour’s vote share.
Speaking ahead of next month’s budget, Reeves said: “For too long, our economy has felt stuck, with people feeling like they are putting in more and getting less out. That needs to change.” She promised a range of policies designed to “bear down on” rising costs, which could help counter negative headlines about an expected swathe of tax rises.
The government is expected to face a spending gap of £20bn-£30bn, and speculation has centred on so-called administered prices – such as utility bills and transport fares – as a potential target. The Bank of England cited these as a key driver of consumer costs in August, and Reeves says the government must support the central bank in its efforts to bring down inflation.
The International Monetary Fund has warned that UK inflation is on track to be the highest among G7 countries this year and next. Reeves’s budget will be closely watched for measures that ease the strain on households while also addressing the fiscal shortfall.
