Andy Burnham Photograph: Neil Hall\/EPAView image in fullscreenAndy Burnham Photograph: Neil Hall\/EPABurnham warns of \u2018difficult decisions\u2019 in budget as inflation rises to 3.1%PM rejects claim he leads a \u2018tax-and-spend\u2019 government, as Bank of England prepares for interest rates decisionAndy Burnham has said \u201cdifficult decisions\u201d will need to be taken in next month\u2019s budget after a rise in energy prices triggered by the Iran war drove UK inflation above 3%.In a fresh blow for living standards amid the worsening damage to the global economy from the Middle East conflict, official figures showed soaring fuel prices pushed inflation from 2.9% in July to 3.1% in August.With the government under pressure as the fallout from the war rattles global financial markets, the prime minister signalled the 28 October budget would take into account investor fears over the hit to the public finances.Reform-linked thinktank \u2018to call for big tax cuts for the rich\u2019Read more\u201cWe will take difficult decisions to make sure the economy remains on track,\u201d he said.\u201cIt is going to be challenging, because the picture around the world is challenging, particularly the situation in the Middle East, and we will look carefully at all those things.\u201cWe won\u2019t take risks with people\u2019s living standards or with the economy as a whole, so we will take it all into account.\u201dGraph showing UK inflation rate from before 2018 to August 2026The prime minister also downplayed criticism from Andy Haldane, who has urged him not to raise taxes. The former Bank of England chief economist, who advised Burnham before he entered Downing Street, told LBC on Tuesday: \u201cThe market now suspects that this is a traditional tax-and-spend socialist government with better TikTok videos.\u201dBurnham rejected that characterisation, saying: \u201cWe are not that already \u2026 It\u2019s not the case that we aren\u2019t going to take difficult decisions.\u201dIn a critical week for the economy, the Bank of England is preparing for a decision on interest rates on Thursday against the backdrop of rising inflationary pressures from soaring oil and gas prices.With headline inflation drifting further from its 2% target, financial markets predict a one-in-five chance of a quarter-point rise from the current level of 3.75% as Threadneedle Street comes under pressure to take action. The City expects at least four increases to 4.75% next year.Economists said there were signs that underlying inflation remained in check amid a cooling UK jobs market. Inflation in the service sector of the economy, which is closely monitored by the Bank, remained unchanged at 3.4%.<\/p>\n
Core inflation \u2013 which excludes volatile items such as energy and food \u2013 also held steady at 2.6%.Official figures on Tuesday showed a slowdown in wage growth and rise in unemployment. The Bank has previously said a cooling jobs market could help limit the risk of stubbornly high inflation becoming entrenched.However, as the fallout from the Middle East war intensifies, economists said inflation in the UK could continue to climb closer to 4%, heaping pressure on the government and the Bank to take action.Susannah Streeter, the chief investment strategist at Wealth Club, said: \u201cGiven this ramp-up in consumer prices, the pressure on the Bank of England to raise rates is mounting, although a hold at 3.75% is still expected tomorrow.skip past newsletter promotionafter newsletter promotion\u201cIt feels like Groundhog Day, with consumers once again feeling the pinch due to geopolitical events far beyond their control.\u201dAs fighting across the Middle East intensifies, the global oil price has soared to more than $106 a barrel.According to the latest inflation snapshot, the Office for National Statistics said the increase in the headline rate in August was driven by a 23% increase in motor fuel prices. The average petrol price rose by 9.1p between July and August to 161.3p a litre, the highest level since November 2022. Diesel prices rose by 14.2p to 181.8p a litre.Air fares also rose sharply, with an increase of 6.2% between July and August, particularly for long-haul routes.<\/p>\n
Rising crude oil and fuel prices also drove up the cost of raw material and the price of goods leaving factories.The sharp rise in energy prices pushed the European Central Bank to raise interest rates last week, while financial markets predicted the US Federal Reserve would raise borrowing costs on Wednesday for the first time since 2023.Bond markets have been thrown into a tailspin, with intense selling pressure pushing the yield \u2013 in effect the interest rate \u2013 on US government bonds above 5% for the first time since 2023 and driving long-term UK government borrowing costs to the highest levels in decades.The renewed squeeze on the cost of living will intensify the calls on the chancellor, John Healey, to use the 28 October budget to give breathing space to British households reeling from years of soaring prices for energy, food and other everyday items.Richard Carter, the head of fixed interest research at Quilter Cheviot, said: \u201cToday\u2019s figures are a kick in the teeth for an administration that wants to make easing the cost of living its central mission.\u201cThe budget is quickly coming into focus and with borrowing costs continuing to climb for the UK, measures are going to be limited and thus growth will remain challenged.\u201dExplore more on these topicsInflationEconomicsInterest ratesBank of EnglandUK cost of living crisisUS-Israel war on IranOffice for National StatisticsnewsShareReuse this content<\/p>\n","protected":false},"excerpt":{"rendered":"
Andy Burnham Photograph: Neil Hall\/EPAView image in fullscreenAndy Burnham Photograph: Neil Hall\/EPABurnham warns of \u2018difficult decisions\u2019 in budget as inflation rises to 3.1%PM rejects claim he leads a \u2018tax-and-spend\u2019 government, as Bank of England prepares\u2026<\/p>\n","protected":false},"author":1,"featured_media":18623,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-18622","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts\/18622","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/comments?post=18622"}],"version-history":[{"count":0,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/posts\/18622\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/media\/18623"}],"wp:attachment":[{"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/media?parent=18622"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/categories?post=18622"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/demo.tcjhomeaccents.com\/wp\/wp-json\/wp\/v2\/tags?post=18622"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}