The Chancellor is a bad news machine. She generates a relentless stream of grim data, and there’s more today.
Inflation is rising again and chancellor Rachel Reeves must take some of the blame (Image: Getty)
Under Rachel Reeves, the news just gets worse and worse. Unemployment has climbed from 4.1% to 5.1% on her watch, as her taxes destroy jobs. The economy failed to grow in five of the eight months to November, with trend growth barely above zero. When GDP rose by 0.3% in November, Reeves desperately tried to grab the glory. It’s not much to boast about.
Today, she got yet another slap in the face. The great hope for 2026 was that inflation would finally drop back to the Bank of England’s 2% target. Beat inflation, and living standards might at last start to recover. That’s what households are desperate for. Keir Starmer has identified the cost-of-living crisis as the main driver of Labour’s collapsing popularity. It won’t recover after today’s inflation bombshell.
Few things anger voters more than spiralling prices but consumer price inflation is rising again, up from 3.2% in November to 3.4% in December. And the Chancellor must take much of the blame.
In the eurozone, inflation is down to 1.9%. The difference? Europe doesn’t have Rachel Reeves.
Pensioners will feel the pain as so many live on fixed incomes. They also spend more of their money on essentials like food and fuel, which are rising fast thanks to Reeves’s repeated policy errors.
Her first Budget in October 2024 was inflationary, especially her £25billion hike to employer’s National Insurance (NI). Businesses can’t just swallow that. They pass it on to customers. So we pay.
Food prices rose a meaty 4.5% in the year to December. That’s faster than this April’s upcoming 4.1% state pension triple lock uplift. Yes, ingredients are more expensive, but that employer’s NI hike played a big part. It hits the supermarkets hard – Tesco is the UK’s biggest private sector employer. They hike prices to protect margins. We pay.
Reeves also hit food manufacturers with a new packaging tax costing £1.4billion a year. Ultimately, we pay for that too. What did she expect? Companies don’t magic money from thin air.
Reeves also chose to placate the public sector unions with generous settlements. The result? Public sector pay is rising at a staggering 7.9% a year, more than double the 3.6% pace in the private sector. Higher wages feed straight into inflation.
She’s also borrowed and taxed more to fund higher public spending, which is inflationary. Hikes to alcohol and tobacco duties have driven up prices too. Again, we pay.
Energy Secretary Ed Miliband deserves a share of the blame. His zealous net zero push is driving up household energy bills, and therefore inflation. No prizes for guessing who pays. We do.
Today’s increase has killed off hopes of a February rate cut, so we’ll pay more for our mortgages too. Reeves repeatedly takes the credit for BoE interest rate cuts but we’d have had several more but for her. In the eurozone, lending rates are down to just 2.15%. Our base rate is 3.75%. Homeowners and businesses pay.
Everyone wants the cost-of-living crisis to ease. Thanks to Rachel Reeves, and a helping hand from Ed Miliband, it’ll drag on and on. And we will pay and pay.
