Tue, 09 Dec 2025

Tue, 09 Dec 2025 Budget could knock half a percentage point off inflation, Bank chief says

Bank of England deputy governor Clare Lombardelli said inflation would be brought down by measures cutting energy prices and freezing rail fares.

* Chancellor Rachel Reeves' Budget could reduce inflation by half a percentage point next year
* Measures such as capping fuel duty, cutting energy prices and freezing rail fares will slow down price increases from April 2026
* Inflation is currently at 3.5% but could drop to 2.5% next year before returning to the Bank of England's 2% target in 2027
* The measures are expected to have a mechanical effect on inflation, rather than addressing underlying causes
* The Budget also includes plans for electric vehicle drivers to pay a new road tax from April 2028, with rates increasing each year with inflation.
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