The rate of inflation has fallen to 2.3 per cent, largely due to lower electricity and gas prices, while the rate of core inflation – which strips out volatile prices like energy – fell to 4.4 per cent. UK inflation is now lower than in the US (3.4 per cent) and the eurozone (2.4 per cent).
Among the many strategies No 10 has devised over the past year to win the next election (pro-motorism, pro-meat-eating, anti-vaping, chess boards for all, maths until 18, bashing Keir Starmer for advising Hizb ut-Tahrir) the most convincing has always been to sit and wait for the economic storm to pass. Tory strategists knew last year that inflation was due to fall and that growth might return in the months prior to the election. The plan was for people to get through the economic slump and then to convince them not to jeopardise that progress by changing government. But the best strategy is not necessarily a good one.
Jeremy Hunt demonstrated the problem on the media round this morning. He simultaneously had to convince listeners that the inflation figure was good news, that the Tories in government means more wealth for voters, and recognise that they are struggling with high prices and bullish housing costs, that people are mad as hell and they’re not going to take it any more. Call it optimistic realism. He had to perform the same balancing act over the mini-Budget. Yes, Liz Truss was a blip, a mistake, whose leadership the whole party regrets; that’s why Rishi and I stabilised the system. But, interest rates were rising before the mini-Budget and the cost-of-living crisis is a global phenomenon so don’t blame the Tory party en masse. He tried to distance himself from his party and defend it at the same time.
Labour’s response is well-honed. Rachel Reeves reminded Sun readers this morning to forget the graphs and ask themselves the Reagan question: do they feel better off today than they did 14 years ago? It’s an easy but effective response. Hunt replies that real-terms wage growth – ie, when wages rise faster than prices – mean people should be better off. He’s right to say wages are growing in real terms. But wages have still not returned to their real-terms 2021 level. Take a look at this chart from the Resolution Foundation:
Where does this leave us? Where we began. The economy is improving but people are still poorer than they were before. Hunt and Sunak are struggling to grapple with the legacies of their predecessors, while they themselves lack the credibility to change the corrosive narrative around the Tory party. Meanwhile, Labour is capitalising.
This piece first appeared in the Morning Call newsletter; receive it every morning by subscribing on Substack here.
[See also: Inside David Lammy’s campaign against kleptocracy]
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