Shopping Around – Policy choices facing businesses and consumers in an election year

As inflation recedes in 2024, many British households will breathe a sigh of relief – the pain has stopped intensifying. This does not, however, mean it no longer there. Across the UK, households continue to feel the effects of ten years of lost growth, the covid-19 pandemic, and the cost of living crisis.

And declining inflation does not mean falling prices. Rather, it means prices are rising less steeply. This will be welcome relief, but won’t reverse the price hikes seen since inflation first started to accelerate.

The effects of inflation have also been uneven, with those at the bottom of society having felt it most severely. By spending a greater proportion of their incomes on the essentials that have been most affected by inflation, they have been hit the hardest. And to bring it down, interest rates have risen. High interest rates are costly for the state – and therefore to its taxpayers – as high debt interest restricts spending decisions. They are also passed on to consumers in the form of higher mortgage rates and subsequently rents – an unwelcome double whammy.

Throughout all of this, the role of businesses in a crisis has become a hot topic. Many have attempted to shield their most vulnerable customers, while others have been accused of profiteering. Whatever your view, the role of responsible businesses is set to become more pertinent as we enter an election year.

Here we identify a number of consumer policy questions that will attract increasing attention in the run-up to polling day and consider how the political parties are starting to think about them.