The UK government’s latest budget measures to ease household energy costs this winter are unlikely to significantly impact overall inflation, according to the country’s fiscal watchdog. UK Chancellor of the Exchequer John Healey unveiled the measures just over a week before the Bank of England’s next interest rate decision.
The announced measures are expected to reduce inflation by only 0.1 percentage point next year before contributing to price growth by the same amount in 2028. This minimal effect suggests that the Bank of England may still face pressure to raise interest rates to combat inflation.
The budget’s limited impact on inflation underscores the challenges facing policymakers as they balance cost-of-living support with broader economic stability. The fiscal watchdog’s assessment highlights the difficulty in mitigating inflationary pressures through budgetary measures alone.