The shadow chancellor, Rachel Reeves, says she is “incredibly concerned about inflation”.
Reeves says the UK’s average inflation rate of 8.7% doesn’t show the full picture.
Poorer households, who spend a greater proportion of their income on food, energy and mortgages, are facing even higher price rises [food inflation was 18.3% a year in May]
Reeves tells Radio 4’s Today programme:
There are some people who are particularly hard hit by what’s happening.
Q: So what should the Bank of England do today? Should they ‘hold their nerve’ and do whatever it takes to get inflation out of the system?
Reeves, who worked at the Bank for many years, won’t give a view. She says it would be “foolhardy” for someone who wants to be chancellor to comment on the decisions of an independent central bank.
Q: Former chancellors, such as Norman Lamont, have argued that a recession may be needed to squeeze out inflation. Would Labour live with a recession to fight inflation?
Reeves criticises this attitude, pointing out that recessions have a “disastrous” impact on families, pensioners and businesses.
She says the government must provide support for those who are suffering most – funded through a proper windfall tax on energy companies.