Is Rishi on track to cut inflation in half? CPI is forecast to rise this week and rates will rise again
The government’s efforts to take credit for the “fall in inflation” risk backfiring because half the public doesn’t know what the phrase means.
Rishi Sunak has made price controls one of his five key promises to voters.
The Prime Minister has said it would be “completely transformative” and that “people will have more money to spend” if his self-imposed target of halving inflation was achieved before the end of the year.
That ambition will take a hit this week when new figures are expected to show the pace of price increases surpassed 7 percent last month, driven by rising gasoline prices.
Interest rates are also expected to rise again this week in the latest attempt to further curb inflation.
Inflation risk: Rishi Sunak and Jeremy Hunt desperate to rein in cost of living
Sunak had previously hinted that halving inflation, to around one per cent, would also mark the end of the cost of living crisis.
But a poll by pollster YouGov suggests his message will fall on many deaf ears. He found that only half of the public understood that if inflation fell, it meant that prices continued to rise, although not as fast as before.
“Worryingly, 36 per cent thought this meant prices had fallen, which could fuel distrust,” YouGov added.
Claiming that people will have more cash in their pockets as inflation falls “plays into this misunderstanding,” said Johnny Runge, a senior researcher at King’s College London.
“It’s a bad political strategy because it’s a lose-lose situation,” he added. ‘If you don’t achieve your goal, you are subject to criticism. But if you do it and communicate it as a success story for the Government, the public won’t feel it and you risk causing a lot of resentment.’
Despite the setback expected this week, Chancellor Jeremy Hunt and Bank of England Governor Andrew Bailey remain confident that Sunak’s inflation target can be met this year as energy bills fall.
But even if Sunak, pictured, hits his inflation target (which was at double-digit levels when he made the promise), it will be difficult to convince voters that they should be grateful, experts say.
The Institute for Fiscal Studies considers that establishing an inflation target “was always a gamble.”