The Chancellor of the Exchequer, Jeremy Hunt, responded to ONS inflation statistics for December 2023.

He said: “As we have seen in the US, France and Germany, inflation does not fall in a straight line, but our plan is working and we should stick to it. We took difficult decisions to control borrowing and are now turning a corner, so we need to stay the course we have set out, including boosting growth with more competitive tax levels.”

Further information: 

  • We are tackling inflation by:
  • Remaining steadfast in our support for the independent Monetary Policy Committee of the Bank of England as it takes action to return inflation sustainably to the 2% target. 
  • Keeping borrowing under control, by consistently withdrawing fiscal support over the forecast. Borrowing is lower this year and next than it was forecast to be in the Spring and the OECD note the stance “adequately support monetary policy” in fighting inflation. 
  • Boosting labour supply. Labour market conditions are a key problem affecting UK businesses’ growth, as well as a significant driver of domestic inflation. Together, the packages at Autumn Statement and Spring Budget 2023 were the two largest increases to labour supply and potential GDP resulting from policy the OBR has ever scored. 
  • Introducing ambitious supply-side measures to support non-inflationary growth, including delivering full expensing to boost investment 
  • Food inflation is slowing. The latest ONS statistics show food inflation has slowed to 8.0%. Last month it was 9.2%.
  • The latest data shows that inflation in France was 4.1% in December and Germany 3.8%.

In response, Mohsin Rashid, CEO of ZIPZERO, said:  "What a blow for Britons. Just as financial recovery had begun to feel possible, hope has once again been ripped away as inflation remains eye-wateringly high – at almost double the Bank of England's target.
 
"The inflationary pillage of our pockets is set to continue, at least for the first half of 2024 – so expect tight budgets and financial sacrifice to remain the default for millions across the country. Until inflation is properly squashed back down to manageable levels, it lies with the government and retailers to step up their support for consumers, through targeted relief and competitive pricing respectively."

Policy Director at My Pension Expert, Lily Megson, said: “Evidently, the battle against inflation is far from over.

“This surprise rise has dealt yet another blow to many consumers who are trying to rebuild their savings after they’ve been throughout the past two years. The question, crucially, is how can Britons restore their financial confidence and get to grips with this ever-moving economic climate?

“Everyone deserves – and, frankly, needs – to understand how to manage their finances effectively. But it’s an area where consumers have historically been let down in this country. It is so, so important that government does more to engage with the financial services sector to develop policy that ensures Britons have accessible routes to financial education and advice, meaning they are better equipped and empowered to achieve their financial goals.”

Jatin Ondhia, CEO of Shojin, said: “This is not the news that people wanted to see at the start of a new year. But investors shouldn’t let this shock increase derail their plans. It was just 0.1% and, given interest rates remain elevated, there are new opportunities.

“The question is whether this is a blip or it signifies more inflation troubles in 2024. If indeed inflation does start to steadily fall again, the base rate is also expected to be cut later this year. So, people will need to consider how they respond to these shifts, as well as broader considerations, such as ‘What happens if the UK economy enters a recession?’ and ‘What might the upcoming general election mean for my investments?’.

“To that end, given this lingering economic and political uncertainty, we should still expect diversification to remain a prominent trend this year. A balance of savings products and lower-risk investments will, for many investors, be balanced alongside some higher-risk investments, providing the opportunity for greater growth in the medium- to long-term.

“However, people choose to manage their finances in 2024, it will be fascinating to see the trends that take shape, given that the investment landscape has evolved markedly when compared to a year ago.”