![Pinterest](https://pinterest.com/pin/create/button/?url=https://uknews.evprotec.com/uk-inflation-and-interest-rates-high/&media=https://uknews.evprotec.com/wp-content/uploads/2023/07/130481523_gettyimages-649370236.jpg&description=Image source, Getty Images is still higher in the UK than in many other rich nations so interest rates may yet stay higher for longer. So how is the UK fairing in other parts of our economic wellbeing? Include growth, jobs and taxes and it's a mixed picture. For all the talk of lower inflation, it still means prices are a painful 7.9% higher in the UK than a year ago. In the EU, that rate is 5.5%, it's even lower in the US at 3%. Britain experienced the worst of both sources of price shocks impacting rich countries - last year's spike in energy and food costs prompted by the war in Ukraine, and a post-pandemic shortage of workers. Like the EU, the UK buys in a lot of energy - but the effects of the fall back in wholesale gas prices is taking longer to show in our inflation numbers This is because of the later introduction of energy support and price movements take a while to be reflected in the cap on domestic bills here. But so-called "core" inflation, a measure which strips out energy and food, remains near its highest rate for 30 years. That suggests there is still strong spending on non-essentials, treats, with some people using savings stashed away during the pandemic, or due to pay rises. It's that discretionary spending that the Bank of England targets when it raises the cost of borrowing. But we're not alone. The rates on new mortgage deals in many other countries have shot up over the last 18 months. But the impact differs. In the US and some of Europe, fixed rate mortgage deals tend to typically run for 25 or 30 years. In some, mortgage holders can switch deals with minimal penalty. The French government also effectively caps rates, so a new 30-year mortgage deal may cost 3.5%. In America those mortgage rates have neared 7%. It's more meaningful to compare effective rates - the average across existing and new home loans. According to the latest published calculations, in the UK, where the majority are on two or five-year fixed deals, that's just below 3% (){kind=link}
Inflation is still higher in the UK than in many other rich nations so interest rates may yet stay higher for longer.
So how is the UK fairing in other parts of our economic wellbeing? Include growth, jobs and taxes and it’s a mixed picture.
For all the talk of lower inflation, it still means prices are a painful 7.9% higher in the UK than a year ago. In the EU, that rate is 5.5%, it’s even lower in the US at 3%.
Britain experienced the worst of both sources of price shocks impacting rich countries – last year’s spike in energy and food costs prompted by the war in Ukraine, and a post-pandemic shortage of workers.
Like the EU, the UK buys in a lot of energy – but the effects of the fall back in wholesale gas prices is taking longer to show in our inflation numbers