London Daily

Focus on the big picture.
Tuesday, Jul 15, 2025

Rishi Sunak warns of tough few months as inflation soars

Rishi Sunak warns of tough few months as inflation soars

Chancellor Rishi Sunak has warned the next few months "will be tough" after it was revealed prices are rising at the fastest rate for 40 years.

In a speech to businesses, he said the government was "ready to do more" to help households facing soaring energy, fuel and food costs.

He also said he would cut taxes for businesses to encourage them to invest.

It comes as a think tank said the poorest were being hit hardest by steep rises in energy bills.

UK inflation jumped to 9% in the 12 months to April, up from 7% in March and the highest level it has reached since 1982.

Inflation is the rate at which prices are rising. For example, if a bottle of milk costs £1 and that rises by 9p, then milk inflation is 9%.

April's jump in inflation came as millions of people saw an unprecedented £700-a-year increase in energy costs last month.

At the annual CBI dinner, the chancellor told businesses the economic situation was "extremely serious", with the country facing "a perfect storm of global supply shocks", including the impact of the war in Ukraine and lockdowns in China.

"There is no measure any government could take, no law we could pass, that can make these global forces disappear overnight," he said.

"The next few months will be tough. But where we can act, we will."

However, he added that he "cannot pretend" it will be easy to cut costs for families.

Mr Sunak also called on businesses to boost investment and training in order to grow the economy and help ease the cost of living crunch.

"And as I've said previously, our firm plan is to reduce and reform your taxes to encourage you to do all those things," he said.

"That is the path to higher productivity, higher living standards, and a more prosperous and secure future."


Around three quarters of the rise in inflation in April came from higher electricity and gas bills, according to the Office for National Statistics (ONS).

A higher energy price cap - which is the maximum price per unit that suppliers can charge customers - kicked in last month, meaning homes using a typical amount of gas and electricity are now paying £1,971 per year on average.

Fuel prices have also surged, with the RAC motoring group warning on Wednesday that petrol and diesel prices have hit new records of £1.68 and £1.81 per litre respectively.

The prices of most other goods and services have risen as well, the ONS said, while wages are failing to keep pace with inflation and falling in real terms.

Up until now households of all incomes had faced similar rates of inflation, but the poorest are now being hit hardest by rising prices because they have to spend far more of their household budgets on gas and electricity, the Institute for Fiscal Studies said.

Retail Economics, a research consultancy, said the poorest people were experiencing a drop of £59 per month in their discretionary spending budgets compared to this time last year.

Citizens Advice said "the warning lights could not be flashing brighter" and the government needed to offer households more support.

"There are desperate stories behind these figures," Dame Clare Moriarty, the charity's chief executive, said. "People washing in their kitchen sinks because they can't afford a hot shower; parents skipping meals to feed their kids; disabled people who can't afford to use vital equipment because of soaring energy bills."


'I can't do much more'



Health analyst Cheryl Holmes, a mother-of-two, said she was trying to keep her living costs "as low as possible" by spending less on food and clothes, and cancelling TV subscriptions.

"I've already for several years been turning the lights off in each room, setting the heating on a timer, making sure I'm using a full dishwasher and washing machine and I'm running out of ideas.

"It's a battle and it seems like there's not really much more that I can do."


UK inflation is simply not supposed to hit levels this high. And as the Bank of England Governor Andrew Bailey has said, these sorts of rises hit the poorest the hardest.

9% is an average across the population. The older Retail Prices Index measure is already at 11%.

But Mr Bailey's institution has a battle on now to get this under control. The really painful issue is that this rate will sustain and is on course to get higher over the course of this year.

And only this week he acknowledged that there was "not a lot" the Bank could do about four-fifths of the anticipated rise, as it is being imported from globally rising prices for energy and food.

The Bank of England has warned the UK's cost crunch could leave the country on the brink of recession, with inflation peaking at over 10% later this year due to further expected rises in energy bills.

The rising cost of living is already seeing people spending less money and cutting down on car journeys due to high fuel costs. And it is impacting the economy, which shrank in March.

The Bank has raised interest rates four times since December to try to cool prices, but MPs have accused it of not doing enough.

This week Governor Andrew Bailey defended its response, insisting inflation was being driven by global forces that limited the Bank's room for manoeuvre.

However the UK now has the highest rate of inflation (9%) of any G7 country, including Germany (7.4%) and France (4.8%).



Kate Worby and Charlie Skudder say they have already stopped socialising and going out for meals


Newsletter

Related Articles

0:00
0:00
Close
Dimon Warns on Fed Independence as Trump Administration Eyes Powell’s Succession
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Jeff Bezos Considers Purchasing Condé Nast as a Wedding Gift
Ghislaine Maxwell Says She’s Ready to Testify Before Congress on Epstein’s Criminal Empire
Bal des Pompiers: A Celebration of Community and Firefighter Culture in France
FBI Chief Kash Patel Denies Resignation Speculations Amid Epstein List Controversy
Air India Pilot’s Mental Health Records Under Scrutiny
Google Secures Windsurf AI Coding Team in $2.4 Billion Licence Deal
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
South African Police Minister Suspended Amid Organised Crime Allegations
Nvidia CEO Claims Chinese Military Reluctance to Use US AI Technology
Hong Kong Advances Digital Asset Strategy to Address Economic Challenges
Australia Rules Out Pre‑commitment of Troops, Reinforces Defence Posture Amid US‑China Tensions
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
U.S. Resumes Deportations to Third Countries After Supreme Court Ruling
Excavation Begins at Site of Mass Grave for Children at Former Irish Institution
Iranian President Reportedly Injured During Israeli Strike on Secret Facility
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Defends Attorney General Pam Bondi Amid Epstein Memo Backlash
Renault Shares Drop as CEO Luca de Meo Announces Departure Amid Reports of Move to Kering
Senior Aides for King Charles and Prince Harry Hold Secret Peace Summit
Anti‑Semitism ‘Normalised’ in Middle‑Class Britain, Says Commission Co‑Chair
King Charles Meets David Beckham at Chelsea Flower Show
If the Department is Really About Justice: Ghislaine Maxwell Should Be Freed Now
NYC Candidate Zohran Mamdani’s ‘Antifada’ Remarks Spark National Debate on Political Language and Economic Policy
President Trump Visits Flood-Ravaged Texas, Praises Community Strength and First Responders
From Mystery to Meltdown, Crisis Within the Trump Administration: Epstein Files Ignite A Deepening Rift at the Highest Levels of Government Reveals Chaos, Leaks, and Growing MAGA Backlash
Trump Slams Putin Over War Death Toll, Teases Major Russia Announcement
Reparations argument crushed
Rainmaker CEO Says Cloud Seeding Paused Before Deadly Texas Floods
A 92-year-old woman, who felt she doesn't belong in a nursing home, escaped the death-camp by climbing a gate nearly 8 ft tall
French Journalist Acquitted in Controversial Case Involving Brigitte Macron
Elon Musk’s xAI Targets $200 Billion Valuation in New Fundraising Round
Kraft Heinz Considers Splitting Off Grocery Division Amid Strategic Review
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
EU Proposes New Tax on Large Companies to Boost Budget
Trump Imposes 35% Tariffs on Canadian Imports Amid Trade Tensions
Junior Doctors in the UK Prepare for Five-Day Strike Over Pay Disputes
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Kurdistan Workers Party Takes Symbolic Step Towards Peace in Northern Iraq
Bitcoin Reaches New Milestone of $116,000
Biden’s Doctor Pleads the Fifth to Avoid Self-Incrimination on President’s Medical Fitness
Grok Chatbot Faces International Backlash for Antisemitic Content
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
×