The Bank of England has lowered its base rate to 4%, offering some relief to borrowers. Yet, for most UK residents, the bigger concern is food price inflation, which may soon climb to 5.5%.
The MPC’s decision was anything but unanimous, with a razor-thin 5-4 vote revealing significant disagreement. Bailey and a small majority opted for a 0.25% cut, while others favored holding steady.
The central bank cited a troubling combination of global agricultural challenges and domestic cost pressures. These factors are increasing food production expenses that supermarkets are now passing on to consumers.
Rising national insurance contributions and wage mandates are also fueling the inflationary fire. The Bank has linked these to higher unemployment and shrinking economic growth seen earlier this year.
While Chancellor Rachel Reeves has taken credit for recent rate cuts, critics claim her policies are aggravating the inflation outlook. For consumers, the rate cut may feel like too little, too late.