As many have already commented, Rishi’s promise to ‘halve inflation by the end of the year’ is the economic equivalent of promising warmer weather in summer. Oil and gas prices are now below pre-Putin levels, China’s open for business again and those Covid ’supply chain’ issues are resolved or resolving; so it’s gonna happen, whatever. The effects of caving-in to/ compromising with/ recognising the hard work and dedication of (delete according to political view or politician’s audience) our nurses and others would not feed the fires of inflation, this year or next. Any decent pay rise they get is unlikely to send the average public sector worker on a spending binge which will push up prices; it will more than likely just let them keep the lights on a bit longer. If it all sounds like good(ish) news, remember, if inflation falls to 5%, that doesn’t mean prices are falling; jutst that they’re not going up so quickly. So don’t break out that bottle of Prosecco you’ve been saving for next Christmas quite yet.
“UK wages grow faster than expected in the last quarter of 2022”
So here’s the dilemma for the Bank of England. Do they push up interest rates further, pushing firms to cut jobs, pushing down the amount others still hiring need to pay to get and keep staff, and so pushing down inflation.