Cost of living crisis: Rishi Sunak's pledge to halve inflation may sound good, but he needs to try harder – Scotsman comment
Needless to say, easy targets have short deadlines while the inspirational, but difficult, ones tend to be set for far enough in the future that any consequences from failing to hit them will be minimal.
Over the past year, the UK has been rocked by an extraordinary cost-of-living crisis. The main reason was the sudden spike in oil and gas prices caused by Vladimir Putin’s decision to invade Ukraine.
Large energy bills and inflation of more than ten per cent have caused many people serious hardship, while industrial unrest has broken out as workers, particularly those in the public sector where pay rises have been lower, have tried to protect their standard of living.
So many will have welcomed Rishi Sunak’s pledge to halve inflation by the end of the year. However, because the figures are calculated annually and the Russian invasion happened nearly a year ago, inflation is almost certain to fall dramatically this spring.
According to the National Institute of Economic and Social Research, “there will be a rapid fall in inflation from 2023”. It expects the figure to remain “well above” three per cent for the whole of this year and not return to the target figure of two per cent until 2025, although the Bank of England predicts this will happen next year.
Wholesale gas prices have also been falling because winter has been unusually mild across much of Europe. This prompted the Governor of the Bank of England, Andrew Bailey, to tell Business Live: “That is encouraging… It does mean there is more optimism now that we are sort of going to get through the next year with an easier path there.”
Given these circumstances and the hugely damaging effects of high inflation, the UK Government should be doing everything it can to bring it under control. Five per cent inflation would still be much higher than it has been for most of the past 30 years.
In business, “stretch targets” are used to drive performance. Politicians are unlikely to metaphorically tie themselves to a medieval rack, but voters should bring pressure to bear to ensure the cost-of-living crisis, and its solutions, remains foremost in their minds.
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