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Wednesday evening news briefing: How Bank failed to grip inflation


The big story: Prices rise faster than Bank predicted

Two weeks ago, Andrew Bailey set out to sound tough on price rises. But, as the Governor of the Bank of England raised interest rates in the biggest increase in borrowing costs for more than 25 years, little did he know that inflation was already accelerating faster than had been predicted

Figures released this morning show that it rose into double figures for the first time in 40 years last month to 10.1pc.

 Unveiling Threadneedle Street’s latest forecasts, Mr Bailey set out a vision of inflation rising to above 10pc later this year, peaking at 13.3pc before dropping back sharply in late 2023 and early 2024. 

But with price rises already well above the Bank’s forecast level, there are growing signs inflation could linger for longer than the Governor hopes, despite his efforts with higher rates. 

Deputy economics editor Tim Wallace explains how rampant inflation is running further away from officials.

Today’s announcement brings a triple whammy for house prices. Plunging real wages are hitting the pockets of both buyers and homeowners, as the ability of many to afford a mortgage is drastically reduced. 

Melissa Lawford says the housing market slowdown has already begun, as she explains everything you need to know.

 Meanwhile, experts have warned that a failure to provide support for struggling homeowners will trigger a “tsunami of repossessions”. In other news on a day in which the cost-of-living crisis tightened further still:

What will new PM do?

Dealing with the deepening cost-of-living crisis will be very high on the agenda of the next prime minister when he or she takes office in less than three weeks. 

After accusations that both candidates – Rishi Sunak and Liz Truss – have failed to lay out detailed enough plans, both would-be Tory leaders took questions from party members at the eighth of the 12 hustings of the race to Number 10. 

Mr Sunak reiterated his pledge to bring forward more direct support for the most vulnerable in society if he becomes prime minister, while a leading supporter of Ms Truss said she recognises “a lot more will have to be done” to help households.

Have your say

It is a sign that people are tightening their domestic budgets. Almost 600,000 British households cancelled their Amazon Prime subscriptions ahead of a price rise as the cost-of-living crisis hits streaming companies. 

But what other changes are Telegraph readers making to their monthly outgoings in the midst of surging inflation? Are you rethinking your shopping habits – and what changes are you making? 

Email a short message to [email protected], along with your name and Front Page in the subject line for the chance to be included in an article.

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