Inflation

Question

The Government understands that people across the UK are worried about the rising cost of living and are seeing their disposable incomes decrease as they spend more on the essentials.

The Government has the ability and resolve to reduce inflation using three tools – independent monetary policy, responsible management of the public finances and supply side reform. These tools will boost our productivity and growth and help to bring inflation under control.

The primary tool for combatting inflation is monetary policy, which is the responsibility of the independent Bank of England’s Monetary Policy Committee (MPC), including decisions on Bank Rate and quantitative easing. Since the MPC were given independence over monetary policy, CPI inflation has averaged around the MPC’s 2% target. The Government remains fully committed to the price stability objective, as well as the 2% inflation target, and retains full confidence in the Committee.

We have a responsibility to help those who, through no fault of their own, are paying the highest price for the inflation we face. However, we also recognise that it is not only the most vulnerable in society that are struggling, which is why we are providing financial support to all households and across a range of income groups. In May, the Government announced over £15bn of additional cost of living support, targeted at those with the greatest need. This package builds on the over £22bn announced previously, with government support for the cost of living now totalling over £37bn this year, equivalent to 1.5% of GDP.