In the News Teaching Activity – with inflation back in its target range, is the cost-of-living crisis over? (May 2024)

According to the ONS Consumer Price Index (CPI) inflation has fallen to 2.3% in the 12 months to April 2024. However, according to Ed Conway consumers are still feeling the pain of the cost-of-living crisis.

At 2.3%, CPI inflation has, at last, dropped into its 2% +/- 1% point target range, though rate this was not as low as many economists expected leaving many experts now believing the next cut in interest rates won’t be till August at the earliest now. Lower inflation is, of course, good news, especially for the incumbent government as the General Election looms. Digging deeper into the inflation data suggests some worrying features. While electricity and gas bills are falling for households, ‘core’ inflation, which excludes the volatile prices changes for food, energy, alcohol and tobacco, is still running at 4.4%. CPIH inflation, which includes owner occupier housing costs rose 3%. However, with average earnings growth hitting 5.7%, there has been some welcome relief for households which are now experiencing an increase in their real incomes on average. However, Conway’s video suggests households won’t forget the cost-of-living crisis in the near future.

Sky's Ed Conway explains why we are still paying more than before cost of living crisis | News UK Video News | Sky News

1 Explain how CPI inflation is calculated in the UK

2 Why is lower inflation ‘good news’?

3 Discuss whether it is too soon for households to stop ‘feeling the pain of the cost-of-living crisis’.