Chancellor Jeremy Hunt admits a spike in inflation is expected
The Chancellor’s concession on tackling inflation comes despite his insistence that the UK government’s plan to bring down inflation is working.
Rish Sunak has promised to halve inflation by the end of the year, despite having neither the power nor the ability to tackle the problem.
Inflation, as measured by the Consumer Price Index (CPI), has fallen to 6.8% from a stunning recent peak of 11.1% last October, but is still a long way off the Bank of England’s 2% target.
Inflation figures for August are expected to be released in September.
Mr Hunt told the BBC’s Sunday With Laura Kuenssberg: “The plan is working, inflation is coming down.”
Read more: Inflation is expected to slow down again after the fall in energy prices
But given that inflation could have picked up in August, Mr Hunt said: “I think we could see inflation falling in September.”
“But after that, the Bank of England says it will go down to about 5%.
“And you know, if we’re going to put money in people’s pockets fast, the fastest way I can be is to deliver on the PM’s promise to halve inflation, because that doesn’t put 1p into the pound, which could mean a tax cut. But 5p a pound in people’s pockets they wouldn’t have had if inflation had stayed high.”
Prime Minister Rishi pledged to halve inflation this year and to fulfill his promise the figure would need to reach around 5.3%.
When asked about the prospect of tax cuts when he makes his fall statement later this year, he said he wanted “nothing” more than to lower the “tax burden”. One way to achieve this is to stimulate the economy. “Good progress” has been made in this regard.
Read more: SNP urges freeze on train fares as inflation rises
He said the second way to do that is to “spend taxpayers’ money more efficiently.”
Mr Hunt said he wrote to foreign ministers on Sunday asking how much time officials are spending on “unnecessary administration”.
He said, “What we need to do now is restart the public service reform agenda.”
“It’s not about working harder, they work very, very hard. But it’s about using money more efficiently.”
Speaking to Sky News, however, he said the reform agenda would not include “further cuts”.
Mr Hunt also denied that he would have made different decisions in his role as chancellor had he known the UK economy would have recovered from the pandemic faster than expected.
Read more: UK manufacturing falls as interest rates and inflation collapse
The Office for National Statistics has revised its estimate for Britain’s post-pandemic growth, saying the economy will be larger in 2021 than in 2019.
Asked on Sky News’ Sunday Morning With Trevor Phillips whether he would have changed course had he known, Mr Hunt replied: “No, because the decisions we made were first and foremost This is because we had to bring down inflation, which peaked at over 11%.”
“A series of incredibly difficult decisions that Rishi Sunak and I made because we knew we could avoid the misery of families watching the cost of their weekly grocery shopping soar, the cost of topping up their tank as long as inflation can’t go down, can’t finish.” Gas… That was our absolute priority,” he said.
Liberal Democrat Treasury spokeswoman Sarah Olney said: “It is an insult to the British people that the Chancellor describes people’s weekly grocery shopping and mounting bills as just a ‘blip’.”
“The Conservatives just don’t get it and have completely failed to get a grip on the spiraling bill.”
