Rishi Sunak had promised to halve inflation over the course of this year, which means it should be below 5.4% by September 🔴 But Government insiders believe the ONS will announce on Wednesday that consumer price inflation remained above 8% in June
A No 10 spokesman said: “We want inflation to halve and ultimately [be] returned to 2 per cent, and that’s what we’re working towards. It requires discipline and that’s what the Government is displaying with things like accepting recommendations on public-sector pay without additional borrowing.”
Conservative strategists believe that if the economy is still struggling at the time of the general election due next year, the party is unlikely to win a historic fifth term in power. A source said: “The economy is the big drag anchor. If inflation does start to fall quickly then public opinion could change, but if it doesn’t that makes things a lot more difficult.”
Unexpectedly high inflation would increase the likelihood of a hike in interest rates when the Bank of England’s monetary policy committee next meets in August. Many analysts expect the main bank rate to peak at 6 per cent or more, driving up the cost of mortgages. After a recovery in the polls when Mr Sunak took over last autumn, the Conservatives are again trailing Labour by around 20 points – pointing to a landslide victory for Sir Keir’s party if the general election were held now.
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