A Bank of England policymaker Swati Dhingra rejected claims inflation is a UK-only issue, urging more interest rate cuts to support the economy.
A member of the Bank's Monetary Policy Committee (MPC), Swati Dhingra, contended that cutting borrowing prices didn't need to be "overly cautious."
Writing in The Times, Ms Dhingra said:
“It’s become commonplace to assert that inflation in the UK is out of step with other economies, requiring a more careful approach to cutting interest rates as a result.
With prices for services and food rising more quickly than in the major eurozone countries, inflation looks like a particularly British problem.”
However, she asserted that this was untrue and that the pressures on UK inflation "will fade."
This year, the OECD states, Britain will see the highest inflation of all the G7 advanced economies.
Ms. Dhingra adds that costs of food have risen faster in the UK than elsewhere in the eurozone often cited as one of the factors exerting upward pressure on inflation.
According to their projections, the G7's overall inflation rate will rank second in 2026, only surpassed by the US.
“But it’s not clear that this gap reflects anything other than global trends and slightly different supply chains and shopping baskets in the two economies,”
she wrote.
“The difference in inflation between the UK and our continental neighbours can be largely explained by administered prices and global commodity shocks.
We can afford to cut rates further and not put additional strain on economic growth without threatening the inflation target.”
Her words go counter to those expressed earlier this week by Megan Greene, a fellow member of the MPC, who suggested that there may be further risks to the UK's inflation outlook.
According to Ms. Greene, given the "uncertainty and risks" facing the economy, a "cautious approach to rate cuts going forward" was justified.
How UK inflation compares to other G7 countries?
Forecasts for 2025 suggest the UK to have a higher inflation rate, among the G7 countries. The projected increase in consumer prices this year is approximately +3.5%. The planned increase is considerably higher than the Bank of England's target inflation rate of 2% and higher than all the remaining G7 affiliated countries: US, Germany, France, Italy, Canada, and Japan.
Drivers of the UK’s inflation include rising energy prices, elevated food prices (especially for beef and dairy products), rising taxes, and National Insurance contributions.
Both Japan and the US also experience relatively high inflation rates among the G7 countries but lower than the UK (Japan at 2.9% and the US at 2.7% late in 2024).