We're paying price of failing to reform our energy market

“What we save on fuel bills will disappear out the door on food’

- Ross Clark

MILLIONS of hardhouseholds pressed will be relieved at news that yesterday's the Energy Price Cap will be lowered to M £2,074 from July 1. Given that energy prices are currently pegged at a level where the average annual bill is £2,500, it should mean a saving of around £426 a year.

But it is hardly the end of the cost of living crisis. Overall, inflation is still running at nearly 9 per cent. This week saw the Consumer Prices Index falling to 8.7 per cent, far less than many economists had hoped.

Food inflation is running at nearly 20 per cent, meaning that what we save on fuel bills will be disappearing straight out of the door on food bills.

Inflation has been a global problem since the end of the pandemic. Money-printing by central banks combined with handouts such as furlough payments helped stimulate demand for goods and services while lockdowns and other Covid measures constrained supply.

That is a strong recipe for inflation. Yet Britain is beginning to look a bit of an outlier for the slow rate at which inflation is falling. In Germany inflation is down to 7.2 per cent, France 5.9 per cent and the US 4.9 per cent.