UK inflation falls sharply for second month to 6.8%
BBC NewsAug 02, 2023
The Facts
According to the Office for National Statistics(ONS), annual inflation in the year to July fell to 6.8%, down from 7.9% in June. However, despite falling from a recent peak of 11.1% in October 2022, core inflation — which excludes food and energy prices — remained unchanged from June's rate of 6.9%
The drop means the Consumer Price Index (CPI) has reached its lowest point since February 2022. The figure has been credited to a fall in average annual household energy bills from the capped rate of £2,500 to £2,074.
The Spin
Pro-establishment narrative
Inflation is falling, but it is still too soon to claim victory over the spiraling cost of living. The news is certainly welcome and will help the public will be further reassured of the competence of the government and the Bank of England. Though economists are waiting it out for additional good news in the following months, there are signs the current crisis is coming to an end.
Establishment-critical narrative
A decrease in inflation is more than welcome, however the current economic crisis has exposed the deeply inadequate economic strategies of the Bank of England and the Conservative government. Unless tactics change, the UK — still the worst performing economy in the G7 — will be hit by a recession in the future. Without reform, the UK will continue to be stung by failing businesses, high unemployment, and falling demand, in short, the recipe for an even larger economic crisis.
