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In the News

UK Economy Update: Inflation Rate Drops to 8.7%

Geoff Riley

24th May 2023

New data released by the ONS finds that the annual rate of inflation in the UK economy has fallen from 10.1% in March 2023 to

Here is a nice primer in the Guardian looking at inflation - how it is measured and some of the terms associated with it. There's clarity about the differences between CPI, CPIH and RPI as well as a little bit of background about stagflation, shrinkflation, greedflation and hyperinflation.

Please read: From CPI to stagflation: how the UK tracks price rises and what key inflation terms mean

The Governor of the Bank of England thinks that we've "turned [the] corner" as far as inflation is concerned, but that there are lessons to be learned.

Please read: Bank of England says inflation has ‘turned corner’ despite soaring food prices

Is this good news for the UK economy, with the IMF amending an earlier forecast, such that it now thinks that the UK is going to avoid a recession and grow by 0.4% in 2023. However, it also warns that inflation is going to remain stubbornly high.

Others have noted the speed with which the IMF has made and subsequently revised their growth forecast, to the extent that a number of commentators are starting to question its credibility.

Please read: IMF expects UK economy to avoid recession

More on the public finances, with the government borrowing more than £25bn in April, with higher inflation-induced interest payments to blame. According to the article: "The ONS said interest payments on central government debt hit £9.8bn in April. That was £3.1bn more than a year earlier, and was the highest April figure since monthly records began in 1997."

As a result, the government is going to exceed this year's full-year borrowing forecast of £132bn, and this might act as a drag on the UK's economic performance going forward.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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