London Daily

Focus on the big picture.
Tuesday, Aug 05, 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
Elon Musk Receives $23.7 Billion Tesla Stock Award
Texas House Paralyzed After Democrats Walk Out Over Redistricting
Mexican Cartels Complicate Sheinbaum’s U.S. Security Talks
Mark Zuckerberg Declares War on the iPhone
India Rejects U.S. Tariff Threat, Defends Russian Oil Purchases
United States Establishes Strategic Bitcoin Reserve and Digital Asset Stockpile
Thousands of Private ChatGPT Conversations Accidentally Indexed by Google
China Tightens Mineral Controls, Curtailing Critical Inputs for Western Defence Contractors
OpenAI’s Bold Bet: Teaching AI to Think, Not Just Chat
Tesla Seeks Shareholder Approval for $29 Billion Compensation Package for Elon Musk
Nvidia is cutting prices on its RTX 50-series graphics cards after sales slowed and inventories piled up
Ghislaine Maxwell Transferred to Minimum-Security Prison Amid Ongoing DOJ Discussions
U.S. Tariffs Surge to Highest Levels in Nearly a Century Under Second Trump Term
Matt Taibbi Slams Media for Role in Russiagate Narrative
Pilots Call for Mental Health Support Without Stigma
All Five Trapped Miners Found Dead After El Teniente Mine Collapse
Ong Beng Seng Pleads Guilty in Corruption Case Linked to Former Singapore Transport Minister
BP’s Largest Oil and Gas Find in 25 Years Uncovered Offshore Brazil
Italy Fines Shein One Million Euros for Misleading Sustainability Claims
JPMorgan and Coinbase Unveil Partnership to Let Chase Cardholders Buy Crypto Directly
Declassified Annex Links Soros‑Affiliated Officials and Clinton Campaign to ‘Russiagate’ Narrative
UK's Online Safety Law: A Front for Censorship
Nationwide Protests Erupt in Brazil Demanding Presidential Resignation
Parents Abandon Child at Barcelona Airport Over Passport Issue
Mystery Surrounds Death of Brazilian Woman with iPhones Glued to Her Body
Bus Driver Discovers Toddler Hidden in Suitcase in New Zealand
Switzerland Celebrates 734 Years of Independence Amid Global Changes
U.S. Opens Official Investigation into Former Trump Prosecutor Jack Smith
Leaked audio of Canada's new PM Mark Carney admitting the truth about the Net Zero agenda: "We're gonna make a lot of money off of this."
China Enforces Comprehensive Ban on Cryptocurrency Activities
Absolutely 100% Realistic EVO Series Doll by EXDOLL (Chinese Company) used mainly for carnal purposes
World Economic Forum founder Klaus Schwab: "In this new world, we must accept... total transparency. You have to get used to it. You have to behave accordingly. But if you have nothing to hide, you shouldn't be afraid."
Meet Mufti Hamid Patel, head of Office for Standards in Education in Pakistan
George Soros tells the World Economic Forum: "President Trump is a con man and the ultimate narcissist, who wants the world to revolve around him."
Hamas are STARVING the hostages.
Decline in Tourism in Majorca Amidst Ongoing Anti-Tourism Protests
British Tourist Dies Following Hair Transplant in Turkey, Police Investigate
Poland Begins Excavation at Dziemiany After New Clue to World War II‑Era Nazi Treasure
WhatsApp Users Targeted in New Scam Involving Account Takeovers
Trump Threatens Canada with Tariffs Over Palestinian State Recognition
Trump Deploys Nuclear Submarines After Threats from Former Russian President Medvedev
Trump Sues Murdoch in “Heavyweight Bout”: Lawsuit Over Alleged Epstein Letter Sets Stage for Courtroom Showdown
Germany Enters Fiscal Crisis as Cabinet Approves €174 Billion in New Debt
Trump Administration Finalizes Broad Tariff Increases on Global Trade Partners
J.K. Rowling Limits Public Engagements Citing Safety Fears
JD.com Launches €2.2 Billion Bid for German Electronics Retailer Ceconomy
Azerbaijan Proceeds with Plan to Legalise Casinos on Artificial Islands
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
×