Sunday, May 11, 2025

Inflation stays stubborn

Inflation failed to drop as expected last month, stuck at an annual rate of 6.7%.

Remaining the same as in August, a fall in the price of food and drink has been offset by rises in restaurant, hotel, and fuel costs.

Core inflation meanwhile, which takes out volatile factors like energy, food, alcohol and tobacco to give a clear picture of underlying trends, rose 6.1% in the 12 months to September 2023, down from 6.2% in August.

For those presiding over interest rate decisions at the Bank of England, the picture becomes ever-more complex. A continued decline in inflation would have presented a case for rates to stay where they are, but if inflation stays stubbornly high, the Bank may consider the only option to be returning to a stint of rate rises again.

It comes after figures last month presented a welcome, surprise slowdown for inflation and saw a pause to a run of interest rate increases.

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