UK Inflation eases but there are still many problems. 

The British economy faces a growing risk of recession. Despite the slight easing of headline inflation, core inflation remains high that means there could be even more interest rate hikes and pain for the economy.

Lowest level since Russia-Ukraine war.

Rising wages, along with stubborn core inflation, means that more interest rate hikes could be on the cards – the doomsayers believe interest rates could reach 6% next year.

The Consumer Prices Index show inflation rose by 6.8%, in the year to July, as energy prices eased, and is at its lowest level since the Russia-Ukraine war broke out in February 2022.  

The figure was down from 7.9% in June, yet the economists are warning tougher times are ahead as stubborn inflation means the Bank of England will be under pressure to keep increasing rates.  

Fears more hikes will drag the country into recession.  

The Institute for Public Policy Research says these expected rises, already at a 15-year high, could drag the economy into recession.   

“Other countries have brought inflation under control quicker than  the UK, with more support for households and workers avoiding unnecessary pain.” 

The pain is largely being in households where money is short .

The Bank of England will be disappointed with these figures.

“Food and energy have been coming down and that has had an impact on headline inflation  But the core inflation (Still at 6.9%) – that is inflation for things like car insurance and travel and so on has actually gone up a bit. I think that means, if anything, the Bank of England will be slightly disappointed with these figures and that makes an interest rate at the next meeting slightly more likely and you can see that in the markets with the pound going up,” says Jonathan Portes, Professor of Economics, King College, London, told Sky News.

“Overall pretty much as expected, but slightly worse.

“We are redistributing money from the poor to the rich.”

What these figures also show is inflation is hitting the poorest households the hardest. People at the bottom end are getting squeezed. The pay  figures show that people at the top end of the scale are getting pay rises, but the people at the lower end aren’t…We’re redistributing money from the relatively poor to the rich.”