Inflation leaps to 2.9 per cent in blow to Burnham

Inflation surged to 2.9% in the past year, a significant increase from 2.6% previously, according to official data from the Office for National Statistics (ONS). This rise in consumer price index inflation signals potential ongoing price growth. Services inflation, a key indicator for wage pressures, eased to 3.4%, while core inflation, excluding food and energy, remained steady at 2.6%.

Factors contributing to the upward pressure include furniture prices falling less than usual and clothing prices seeing a smaller decline due to reduced discounts. Raw material and goods prices have also slowed due to drops in crude oil and refined petroleum. Chancellor John Healey reassured the public that "Britain's economy is resilient" despite the Iran war impacting domestic prices, adding that the government has implemented cost of living measures, such as cutting VAT on electricity bills and capping bus fares.

Shadow chancellor Sir Mel Stride criticized Labour's handling of inflation, stating that prices have accelerated under their leadership, now surpassing the two percent target for 22 consecutive months. Investment strategist Scott Gardner noted that the Iran war is impacting household bills, with businesses facing higher input prices that could affect consumers later in the year.

However, some relief is being seen in falling services inflation and shop prices. The rising inflation could pose challenges for Burnham's cost of living push, with economists predicting inflation to peak at around three percent later this year or early 2027. Meanwhile, UK borrowing costs have reached a near two-decade high, raising concerns about interest rate hikes and further pressure on government plans to ease the cost of living crisis.