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UK cost of living crisis looms
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The gist
UK inflation forecast to hit 3.2% by year-end as energy bills soar. New PM Burnham's VAT cut saves households £45 a year.
Background
The UK is facing a renewed cost of living crisis as global energy prices surge, partly due to the Iran war's impact on oil and gas supplies. The Bank of England predicts inflation will reach 3.2% by the end of the year, despite government measures. New Prime Minister Burnham has announced 'breathing space' measures, including a VAT cut to reduce electricity bills by an average of £45 a year from October.
How it unfolded
- Aug 10, 2026Economists predict UK inflation for July will rise to 2.9%, up from 2.6% in June, driven by soaring energy bills.
- Aug 12, 2026Socialist Party article calls for unionization and workers' action to fight inflation, citing TUC's 800% increase in 'Join a union' webpage visits during last strike wave.
- Aug 16, 2026The Guardian reports Bank of England predicts inflation will reach 3.2% before year-end; PM Burnham's VAT cut to save households £45 a year from October.
Who’s saying what
- Official
- Bank of England forecasts inflation at 3.2% by year-end despite government measures.
- Analysts
- Economists predict July inflation will jump to 2.9% from 2.6% in June, driven by energy costs.
- Party
- Socialist Party argues for mass unionization and workers' fightback against the cost-of-living crisis, criticizing the Labour government.