Sunak insists his plan is working despite surprise hike in inflation

The Prime Minister said his priority would be cutting taxes ‘when it’s responsible to do so’.

Rishi Sunak insisted his economic plan was working despite Wednesday’s unexpected rise in inflation (Stefan Rousseau/PA) (PA Wire)

The Prime Minister insisted Britain was “pointing in the right direction” despite an unexpected increase in inflation at the end of last year.

Figures released on Wednesday showed inflation rose slightly to 4% in December, confounding expectations after a year in which inflation had more than halved.

In a press conference on Thursday, Rishi Sunak said his economic plan was delivering “demonstrable” progress and would deliver further tax cuts in future.

He told reporters in Downing Street: “I’m interested in sticking with the plan that I set out to the British people, because that plan is working.

“It is delivering real change.

“And if we stick with that plan, we’ll be able to build a brighter future for everyone’s families in this country and a renewed sense of pride in our nation.

“And the progress that we have made is demonstrable.

“Listen, last year was a tricky year.

“Recovering from the legacy of Covid, backlogs in our public services, the impact of the war in Ukraine on energy prices.

“But we are now pointing in the right direction, progress is being made.

“We’ve now had five months where wages have been rising faster than prices.

“People have started seeing the benefit in mortgage rates with those coming down.

“Inflation has fallen… from over 11% to 4%.

“And because of that progress, we were able to deliver a very significant tax cut for tens of millions of people in work.”

Economists have warned that further increases in inflation could take place due to the impact of insecurity in the Red Sea on shipping costs, and on Wednesday the Chancellor acknowledged that inflation “does not fall in a straight line”.

On Thursday, Mr Sunak said the Government’s priority was to continue cutting taxes “when it’s responsible to do so”.

He said: “We want to keep cutting people’s taxes because we believe that people should be able to keep more of their own money.”

The new year brought a cut in the rate of national insurance, worth £450 a year to someone on the average salary of £35,000, although the overall tax burden is still forecast to rise over the coming years.