logo
More headache for Starmer as UK's inflation jumps amid rising cost of living debate

More headache for Starmer as UK's inflation jumps amid rising cost of living debate

First Post16-07-2025
The unexpected rise in UK inflation to an 18-month high has intensified pressure on Prime Minister Keir Starmer read more
The UK's inflation rose unexpectedly in June to 3.6 per cent, marking the highest annual rate since January 2024, according to the Office for National Statistics (ONS). The rise was attributed mainly to high food and motor fuel costs, with analysts having predicted inflation would remain unchanged from May's rate of 3.4 per cent.
ONS acting chief economist Richard Heys said that fuel prices fell less sharply this year compared to June 2023, contributing to the inflationary pressure. He also noted that food price inflation rose for the third consecutive month, reaching its highest level since February 2024.
STORY CONTINUES BELOW THIS AD
Economic woes pile up for Starmer's government
The inflation data followed another worrying signal: the UK economy contracted for a second month in May. This dual blow has amplified the challenges facing Prime Minister Keir Starmer, who is now contending with both economic stagnation and intensifying political pressure.
Finance Minister Rachel Reeves acknowledged the strain households are under, saying that 'there is more to do' to support people struggling with the cost of living. However, critics argue that government measures have not kept pace with the financial realities facing many households, especially the least well-off.
Living standards stagnate despite rising wages
While the government points to wage growth — hovering around 5 percent—as a sign of improvement, new analysis suggests that many Britons are seeing little benefit. Bloomberg reported that discretionary incomes fell by 4.2 per cent in April and remained flat in May, making this period the worst for household finances since the energy price shock in 2022.
Data from Retail Economics showed that incomes have dropped 7.5 per cent since Labour came to power in July 2024, with lower-income groups hardest hit. Nicholas Found, head of commercial content at the firm, told Bloomberg that unavoidable costs such as council tax, rail fares and utility bills have eaten into earnings, negating recent wage increases.
Labour's tax policy adds fuel to the fire
The government's stance on income tax thresholds has further fuelled discontent. Prime Minister Starmer has not ruled out extending the freeze on tax brackets — a policy initiated under the previous Conservative administration and scheduled to last through 2028.
According to the Resolution Foundation, this fiscal drag is likely to wipe out much of the wage growth for middle-income earners, and could even result in a decline in real take-home pay once local levies like council tax are factored in. These policies have sparked criticism from voters and analysts alike, who view them as regressive during a period of widespread financial strain, the Bloomberg report said.
Reform UK capitalises on discontent
As economic conditions tighten, Labour is facing growing political backlash. Populist party Reform UK, led by Nigel Farage, has overtaken Labour in some opinion polls by promising tax relief and more direct support for working-class voters. The surge in support for Reform reflects the fragility of Labour's mandate and the growing frustration with mainstream policy responses.
Despite the government's insistence that rising wages mean Britons are better off, polling and spending data suggest otherwise. Lancaster University's Work Foundation found that one in six workers are struggling to pay monthly bills, and fewer than half believe wage growth is keeping up with the cost of living. The same survey found that nearly 10 per cent more people now hold second jobs compared to a year ago, reaching record highs, as families turn to gig work and side jobs to bridge income gaps, Bloomberg reported.
STORY CONTINUES BELOW THIS AD
Bank of England faces a tightrope on interest rates
While the inflation rise could normally signal a need to hold or raise interest rates, economic sluggishness may force the Bank of England to ease policy anyway. Ruth Gregory, deputy chief UK economist at Capital Economics, suggested that the Bank may still cut rates by 25 basis points in August, given the broader weakness in growth. However, she also warned that the latest inflation figures will likely prompt a slower, more cautious rate-cutting cycle, AFP said.
Policymakers are especially wary of 'second-round' inflationary effects, where higher wages drive further price increases, a cycle that could be difficult to break.
A political and economic crossroads
The unexpected rise in inflation has only intensified the economic and political challenges facing Starmer's government. While officials continue to highlight wage growth as a sign of progress, many households are experiencing deteriorating living standards, rising taxes and increased debt.
With Reform UK gaining momentum and household budgets under siege, the Starmer administration finds itself at a precarious juncture. The path forward will require not only sound economic management, but a convincing narrative that connects macroeconomic gains with real improvements in daily life. Until then, the pressure will likely keep mounting—from the public, the opposition and the markets alike.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Immigration 'killing' Europe, says Donald Trump; calls on nations to 'stop horrible invasion'
Immigration 'killing' Europe, says Donald Trump; calls on nations to 'stop horrible invasion'

Hindustan Times

time10 minutes ago

  • Hindustan Times

Immigration 'killing' Europe, says Donald Trump; calls on nations to 'stop horrible invasion'

US President Donald Trump on Friday said that Europe needs to 'get its act together' in terms of immigration, claiming the continent would not exist 'anymore' if this 'invasion' goes unchecked. President Donald Trump speaks to members of the media after he arrived at Prestwick Airport in Ayrshire, Scotland, on Friday,(AP) Talking to reporters after landing at Scotland's Prestwick airport in Ayrshire, Trump said that he had a couple of things to say to the leaders and people of Europe, the most pressing issue being immigration. He is in Scotland for a weekend trip, where he will meet UK PM Keir Starmer on Saturday 'There are a couple of things I could say, but on immigration, you've got to get your act together. You won't have Europe anymore,' he said. Donald Trump went on to claim that nobody entered the United States last month. The US president once again derided his predecessor, Joe Biden, for 'allowing' people into the country. 'You know, last month we had nobody entering our country. We shut it down. We took out a lot of bad people that got there when Biden….. Biden was a total stiff when he allowed it to happen. But you're allowing it to happen to your countries. And you've got to stop this horrible invasion……This immigration is killing Europe,' he added. Immigration in Europe While Immigration is one of Donald Trump's biggest campaign promises, it is also a major issue in Europe. In May, UK PM Keir Starmer said the country risked becoming 'an island of strangers' when he unveiled plans for tighter immigration controls in a major speech. Earlier this month, Starmer and Emmanuel Macron announced a reciprocal migrant returns deal that the UK Prime Minister and French President hope will reduce the number of small boat crossings in the English Channel. Italy has also adopted a tough stance on immigration, with Prime Minister Georgia Meloni previously saying that she will not allow the country to become 'Europe's refugee camp'.

Indian-origin entrepreneur who served chai to PM Modi, PM Starmer opens up about his ‘surreal day'
Indian-origin entrepreneur who served chai to PM Modi, PM Starmer opens up about his ‘surreal day'

Hindustan Times

time10 minutes ago

  • Hindustan Times

Indian-origin entrepreneur who served chai to PM Modi, PM Starmer opens up about his ‘surreal day'

Akhil Patel, a London-based Indian-origin founder of a tea company who served chai to PM Modi and PM Starmer during the Indian leader's recent visit to the UK, has opened up about his 'surreal experience.' In an Instagram post, he recalled how he felt once he saw the world leaders walking towards his stall to have tea instead of coffee. Indian-origin entrepreneur Akhil Patel serving tea to Prime Minister Narendra Modi and Prime Minister Keir Starmer. (X/@narendramodi, X/amala_chai) 'A quick recap of a surreal day. Yesterday, I was invited by @10downingstreet to serve chai at Chequers — to @narendramodi , @keirstarmer, and Indian & UK ministers. Can we just take a moment to realise how mad that is?' the entrepreneur posted on his company Amala Chai's official Instagram page. 'There I was, in the UK Prime Minister's house, serving masala chai — and not one person wanted coffee,' he continued. 'From one chaiwala to another, that was a special day. Right… I'm getting off the internet now to make a cup of chai,' he added. Who is Akhil Patel? A London School of Economics graduate, Patel started his career as a data analyst. However, he shifted his career from corporate employee to entrepreneur in 2019 after founding Amala Chai. He started his company after being inspired by his grandmother and her love for tea. The company claims to procure all the materials it sells directly from 'small family farms in Assam and Kerala.' PM Modi's recent UK visit: In a statement, India's Ministry of External Affairs said, 'During his official visit to the United Kingdom from 23-24 July 2025, Prime Minister Shri Narendra Modi met today with the Prime Minister of the United Kingdom, Rt. Hon. Sir Keir Starmer. On arrival at the UK Prime Minister's country residence at Chequers in Buckinghamshire, he was warmly received by Prime Minister Starmer. The two leaders held a one-on-one meeting as well as delegation level talks.'

From 'Show Proof' To 'No Objection': Pak's Stunning U-Turn On TRF Linked To Pahalgam Terror Attack
From 'Show Proof' To 'No Objection': Pak's Stunning U-Turn On TRF Linked To Pahalgam Terror Attack

Time of India

time10 minutes ago

  • Time of India

From 'Show Proof' To 'No Objection': Pak's Stunning U-Turn On TRF Linked To Pahalgam Terror Attack

'We Can Use English Words': PM Modi Steps In As Translator Struggles With Hindi During UK Presser During a joint press conference with UK Prime Minister Keir Starmer, Prime Minister Narendra Modi stepped in to ease a Hindi translator's struggle while translating Starmer's remarks. Modi calmly told the translator, 'Use English words in between… don't worry,' and reassured him with a warm 'No problem' when he apologised. The light-hearted moment occurred after India and the UK signed a long-awaited Free Trade Agreement aimed at enhancing bilateral trade and investment. PM Modi also used a cricket analogy, saying the India-UK partnership is like a game played with a straight bat—solid, passionate, and always aiming for high scores.#modiukvisit #indiaukfta #tradedeal #modi #starmer #modistarmer #cricketdiplomacy #bilateralrelations #freetrade #economiccooperation #diplomacy #globalpartnerships #viral #trending #viralnews #toi #toibharat 57.7K views | 1 day ago

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store