Faisal Islam: Inflation complicates next month's interest rate decision

While the economy started this year strongly, Wednesday saw another example of a surprise to the markets in the wrong direction.

In May the economy slowed again, and now inflation has quickened faster than expected. It is expected to stay well above the Bank of England's target level until autumn.

For consumers, still reeling from years of higher prices and a recent pickup in food prices, the new number is less a surprise, more the confirmation of their ordinary day-to-day challenges.

On top of that, and just as important for some people, the bounce in inflation complicates the Bank's rate cut plan.

Investors have been treating it as pretty much nailed on that rates will come down again in August, from the current 4.25%.

Now there is definitely a sense of renewed caution.

A former rate setter at the Bank, the economist Andrew Sentance, even said it would be "irresponsible" for interest rates to be cut next month.

Expectations remain that the cut in August and another one later in the year will go ahead.

But the Bank will have to explain why it is looking beyond this current rise in inflation, into next year's expected drop-back to the 2% target.

It will mean the return of old questions around whether the UK is more inflation-prone than other countries, for example because of increasing wage and tax costs being passed on in the form of higher prices.

A weakening jobs market is another part of the deliberations. The latest employment figures will be published on Thursday.

If, as expected, they show a continued fall in vacancies, then that strengthens the argument for going ahead with a cut in rates. Bloomberg is predicting a 4.9% unemployment rate, up from the 4.6% reported last month.

But as always it is important to keep all the figures in perspective.

True, other major economies have not seen a similar bounce in inflation. The eurozone's latest inflation rate is just 2%. But inflation is nowhere near the highs of the energy crisis, and will come down as energy prices fall in the autumn.

Growth is definitely slowing, but we are not in recession, and the very latest activity figures suggest recovery in some sectors.

Appeal to extend teenage killer's sentence refused

1 hour ago Share Save Danny Fullbrook BBC News, Bedfordshire Share Save

Bedfordshire Police Nicholas Prosper had planned to kill pupils at his old primary school after murdering three members of his family

The Court of Appeal has rejected a request for a teenager who murdered three members of his family to never be released from prison. Nicholas Prosper, now 19, killed his mother Juliana Falcon, 48, his sister Giselle, 13, and his brother Kyle, 16, at their flat in the Leabank tower block in Luton in September 2024. In March, he was given a 49-year minimum term in jail, but the solicitor general referred the case to the appeal court under the Unduly Lenient Sentences scheme and asked for a whole-life order to be imposed. Lady Chief Justice Baroness Carr rejected the request, citing Prosper's young age and the fact he would be in his late-60s before he could be considered for release.

As it happened: Live updates from the Court of Appeal She told the appeal court: "Appalling though these crimes were, we are not persuaded that anything less than a whole-life order was unduly lenient. "It is a sentence that requires a youth of 18, as he was at the time of his arrest, to remain in custody until he is in his late 60s and one that might result in him never being released." Prosper watched the appeal via a video-link from HMP Belmarsh, often fidgeting in his seat. As part of his life sentence for murder, his minimum term of 49 years remains in place and it will be the mid-2070s before he is considered for release on parole.

Contributed Juliana Falcon, 48, Kyle Prosper, 16, and Giselle Prosper, 13, were found dead at their flat in Luton

Prosper, then 18, had used a gun and knife to kill his family in the early hours of 13 September 2024. He also admitted to weapons charges after he had planned a mass shooting at his former primary school in the town. After a noisy struggle with his family, the police were called by a neighbour, forcing Prosper to hide and interfering with his prepared schedule. After hiding for nearly two and a half hours he flagged down a passing police officer, having given up on his plans to commit a massacre at the school.

Prosper was sentenced to life in prison for his crimes, with a minimum term of 49 years. Solicitor General Lucy Rigby KC referred the sentence to the Court of Appeal in April, branding it "unduly lenient". The Attorney General's Office said that Prosper "ought to have been given a whole-life order" which would prevent him from ever being released. Whole-life orders are reserved for the most serious crimes and until 2022 could not be given to anybody under the age of 21. Those aged between 18 an 20 can only receive the sentence in exceptional circumstances, even when compared to crimes committed by older offenders. When Prosper was sentenced in March the judge did not issue a whole-life order due to his young age, his guilty plea and the fact he did not actually carry out the planned school shooting.

PA Media Prosper had killed his family in their home in Leabank on Luton's Marsh Farm estate

Tom Little KC, prosecuting, told the hearing at the Court of Appeal: "What the facts reveal is a case which, on any view, was exceptional, even in the context of a murder. "It was a murder of three people, two of them were children, including the intended rape of the sister. That did not take place, but it had been intended." Prosper's defence told judges that the sentence, with its 49-year minimum term, "cannot be said to be unduly lenient". David Bentley KC, for Prosper, said: "The reality is that with the existing sentence, the earliest date he could actually be considered for parole is in his late 60s, and the dangerousness is covered by the life sentence." The lead judge Lady Chief Justice Baroness Carr remarked: "No sentence can ever reflect the value of lives lost." She went on to offer the court's sympathies and condolences to those affected by Prosper's murders in Luton.

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Starmer suspends Labour MPs over discipline breaches

Prime Minister Sir Keir Starmer has suspended three Labour MPs over breaching party discipline.

The BBC understands Neil Duncan-Jordan, Brian Leishman and Chris Hinchliffe have had the party whip removed, meaning the MPs will sit as independents in the House of Commons.

Senior Labour sources have not ruled out further MPs, including from earlier parliamentary intakes, being suspended later today.

Duncan-Jordan, Leishman and Hinchliffe were all elected as Labour MPs for the first time last year. The BBC has asked the three suspended MPs for comment.