One of Mr. Sunak’s objectives this year is cutting the inflation rate in half. That shouldn’t be difficult, as the Bank of England, which is charged with maintaining price stability, has already predicted that inflation would decline to 4 percent by the December.
Another 2023 objective — expanding the economy — may be trickier. Next month, the Treasury will publish its next budget, a set of spending and tax proposals that probably have only limited influence on short-term growth prospects. In the near term, Mr. Sunak and his government ministers are under pressure to bring an end to a series of strikes by public-sector workers, among them nurses, ambulance workers and teachers, who have walked off the job over pay.
Last year, Britain lost 2.5 million working days to strikes, according to the statistics agency, the most in more than 30 years.
Pay, once adjusted for inflation, has been falling for a year. In the last three months of 2022, public-sector wages rose 4 percent from a year earlier but were outpaced by double-digit inflation, data published on Tuesday showed. In the private sector, pay growth, excluding bonuses, was about 7 percent, the fastest pace since the pandemic, when lockdowns disrupted employment.
While private-sector pay growth is also lagging behind inflation, it is fast enough to concern policymakers at the Bank of England, who want to prevent inflation from becoming embedded in the economy. They raised interest rates this month to 4 percent, the highest since 2008, citing signs that fast wage growth and inflation in the services sector could mean stubbornly high prices ahead.
But they also softened their language on future rate increases, as inflation appears to have peaked and the British economy still needs to absorb much of the impact of past rate increases.
“We have seen a turning of the corner” on inflation, Andrew Bailey, the governor of the bank, said this month. “But it’s very early days, and the risks are very large.”