Today’s shock inflation figure is a stark reminder, if one were needed, that the Chancellor finds himself in challenging waters.
Rishi Sunak’s spring statement was always going to be judged on his response to the cost of living crisis. But the higher than expected rise to 6.2 per cent demonstrates that this is a fast-moving situation, one that cannot be easily remedied by the usual rhythms of biannual fiscal events.
So today’s speech must be only the start. Because as everyone from the Chancellor to ordinary people doing the weekly shop or paying the energy bill knows, prices will continue to rise and with it, living standards fall.
Indeed, that figure of 6.2 per cent is from February and therefore comes before the lifting of the energy price cap and the hike in national insurance. Should interest rates be increased in an attempt to clamp down on inflation, the effect would be to raise borrowing costs for households. In other words, there is no easy fix.
So regardless of what the Chancellor has chosen to do today, he must be prepared to continue to respond to the choppy economic conditions, perhaps returning to Parliament before the autumn Budget with a further package of support.
Londoners are bracing themselves for real pain coming down the line. What we need now is an agile chancellor. Sunak demonstrated his ability to lay down his ideological priors during the early phase of the pandemic. He will need to do so again if he is to prove a match for the coming storm.
