Inflation might go UP this month, warns Jeremy Hunt – but Chancellor vows CPI will be halved this year… as he bats away Tory calls for immediate tax cuts and Michael Gove fuels splits by hinting at new ‘wealth’ levies
Jeremy Hunt today warned that inflation might rise this month as he batted away Tory calls for immediate tax cuts.
The Chancellor braced Britons for a ‘blip’ when the latest figures for August are released, with fears CPI could nudge over 7 per cent again.
But Mr Hunt insisted Rishi Sunak’s pledge to halve in inflation will be kept this year, batting away Tory calls for tax cuts by saying he will ‘stick to the plan’.
Michael Gove also risked fuelling Conservative splits by hinted at backing for levies focused on wealth rather than income.
Mr Hunt took to the airwaves this morning as the PM tries to use the return of Parliament to ‘reset’ his government.
Mr Sunak has already carried out a limited reshuffle, surprising Westminster by installing ally Grant Shapps as Defence Secretary after the departure of Ben Wallace.
Another loyalist, Claire Coutinho, has been drafted in to to take Mr Shapps’ old duties as Net Zero Secretary.
But the shake-up has been partly derailed by the shock resignation of No10 communications director Amber de Botton.
Meanwhile, there is little sign of a Tory recovery in the polls, with Labour still enjoying double-digit leads. And Mr Sunak is facing the risk of a double by-election hammering next month.
Nadine Dorries’ old Mid Beds seat is up for grabs, while former deputy chief whip Chris Pincher will learn this week whether his appeal against an eight-week suspension from the Commons has succeeded.
If his bid is rejected he will be subject to a recall petition, with speculation he could opt to resign his Tamworth seat.
Chancellor Jeremy Hunt (pictured on Sky News this morning) insisted that he will ‘stick to the plan’ to ensure Rishi Sunak’s pledge to halve in inflation is kept
There were fresh signs of Conservative splits as Michael Gove (pictured) hinted at backing for taxes focused on wealth rather than income
There is little sign of a Tory recovery in the polls, with Labour still enjoying double-digit leads
The headline rate of inflation has eased back to 6.8 per cent from a recent eye-watering peak of 11.1 per cent last October.
But it is still more than treble the Bank of England’s 2 per cent target.
When Mr Sunak committed to halving the level in January it stood at 10.7 per cent.
Threadneedle Street has increased interest rates 14 times in a row to 5.25 per cent as it struggles to get a grip on prices. The Monetary Policy Committee is widely expected to vote for another hike when it next meets on September 21.
Asked whether inflation will have risen last month, Mr Hunt told BBC’s Sunday with Laura Kuenssberg that ‘we may see a blip in inflation in September’.
‘The plan is working, inflation is coming down,’ he said. ‘I do think we may see a blip in inflation in September.
‘But after that the Bank of England is saying it will fall down to around 5 per cent.’
Mr Hunt said in a statement overnight: ‘As we move into autumn, I know family budgets are still stretched, but inflation is coming down, and now is the time to see the job through.
‘We are on track to halve inflation this year and by sticking to our plan we will ease the pressure on families and businesses alike.
‘And it should be no surprise, despite the doubting from some. Latest figures show we have bounced back better than many other G7 economies and are one of the most attractive countries in the world to invest.’
The Treasury added that limiting spending is seen as key to keeping interest rates down and Mr Hunt will be continuing his ‘public sector reform’ programme aimed at making the state more efficient.
The Chancellor and PM have been trying to manage growing Tory unrest by insisting they are putting the country on a ‘path to lower taxes’ in the longer term.
But Levelling Up Secretary Mr Gove risked opening a new front in the internal struggles by suggesting he would favour a wealth tax.
‘One of the big gear changes over the past however many years has been not that income inequality has worsened – it’s not great, but it hasn’t worsened – it’s wealth inequality that has worsened,’ the Cabinet minister told the Financial Times’ Political Fix podcast.
‘One of the questions in my mind is how do we reward opportunity, aspiration, work and creativity and then find a way of extracting what we need for public services from those who operate in a rentier fashion.’
Labour has moved to rule out such a tax if it wins the next election, after fears were raised that home-owners would be targeted.
Mr Hunt is taking to the airwaves this morning as the PM (pictured) tries to use the return of Parliament to ‘reset’ his government
There was a rare piece of good news for the government on Friday when the Office for National Statistics (ONS) dramatically revised up the UK’s bounceback from Covid.
Britain had been regarded as recovering worse economically than the rest of the G7, with many blaming Brexit.
But updated data showed that in fact the performance was much better, and all ground had been clawed back by the end of 2021.
That means that the UK had the third fastest economic recovery out of the group of powerful nations.
Shadow chancellor Rachel Reeves said: ‘Jeremy Hunt’s comments are completely out of touch to the economic realities facing families across Britain.
‘Going from no growth to low growth doesn’t merit a victory lap and shouldn’t be the summit of our ambitions.
‘After 13 years of economic failure, the Conservatives crashed the economy and left working people worse off, with higher taxes, higher mortgages and higher bills.’
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