There are signs of things settling downpublished at 08:24 BST
Dharshini David
Deputy economics editor
Image source, Getty Images
There is relief for many that
inflation didn’t hit the feared 4% last month – relief for households, the
government and the Bank of England.
Inflation, of course, remains considerably above the Bank of England’s target and while that
persists, consumers may remain jittery about spending, uneasy about the future
path of prices.
After all, during the spike in inflation a couple of years
back, they experienced the equivalent of more than a typical decade’s worth of
price rises in just two years. They are scarred.
But, there are signs
that things are settling down – food prices are easing, for the first time in
months. And economists feel that the impact of some of the other higher costs
firms have been passing on – such as tax and wage rises – may be peaking.
Economists
expect inflation to fall back towards the 2% target next year.
However, price rises in
other areas, such as services – think hotels and restaurants – remain stubborn.
Chancellor Rachel Reeves says she is not satisfied with progress as yet and has hinted at
help to come in November‘s Budget, with, we understand, some relief expected on energy bills.
And until then, if the Bank of
England feels that inflation is firmly under control, it’s likely reluctant to
resume cutting interest rates. Borrowers may not see further relief for several
months.
