British Finance Minister Jeremy Hunt said that despite the continued tightening of monetary policy by the Bank of England, inflation in the UK remains too high.
Yesterday, the Bank of England said it now expects inflation to reach the 2% target only at the beginning of 2025, after the last date of the next general election. Previously, inflation was expected to fall below 2% during the year. The Bank of England predicts that consumer price inflation will fall to 5.1% in the fourth quarter of 2023, which is 1.2% higher than the previous forecast.
According to the report from the Office for National Statistics (ONS), consumer prices rose by 10.1% per annum in March after rising by 10.4% per annum in February. Economists had expected CPI growth by 9.8% per annum. Inflation remains above 10% for the seventh month in a row and is more than 5 times higher than the Bank of England's target level (2%). Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose 6.2% per annum, as in February. This was the strongest growth since December 2022. Consensus estimates suggested an increase by 6.0% per annum.
“I think we realize that we still have a long way to go. We still have too high inflation, economic growth is still not as high as we would like,” Hunt said.
Commenting on today's GDP data, Hunt said that these are figures that no one could have predicted even three months ago. "Nevertheless, concerns remain about the supply of labor, productivity indicators and how to increase long-term growth," the finance minister added.
Hunt stressed that he supports yesterday's rate hike by the Bank of England, despite the latest GDP results, arguing the measure will counter the “fundamental instability" triggered by high inflation.