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Cost of living crisis far from over despite hefty inflation drop, ICAEW says


Published: 16 Aug 2023

Suren Thiru, Economics Director at ICAEW, responded to the UK inflation figures for July 2023, released by the Office for National Statistics today (Wednesday 16 August 2023):

“Although these figures provide reassurance that the inflation tide has turned, this latest drop owes more to lower energy bills, following the reduction in Ofgem’s energy price cap, than to a broader easing of price pressures.

“It’s encouraging that pay is outpacing price growth, but any financial boost is likely to be swallowed up by higher taxes, borrowing costs and rent, so for most people this won’t feel like a turning point in the cost-of-living crisis.

“While core and services inflation are proving harder to shift, they should fall back over the rest of the year as rising unemployment and tighter monetary policy help choke off demand in the economy.

“Though another interest rate rise in September looks inescapable, this drop in inflation may drive a more notable voting split in the Monetary Policy Committee next month, particularly as worries over the UK economy grow.”


Notes to editors:

Contact: ICAEW media office media.office@icaew.com, tom.mackintosh@icaew.com or 07866 853 841