The announcement earlier today of another cut taking UK interest rates to 4.75% has come as Sainsbury's followed in the steps of fellow retailer Marks & Spencer with a warning of higher prices to come as a result of last week's Budget.

The tone from Sainsbury's was strikingly similar to that yesterday of M&S, which said it is facing additional costs of £240 million next year from increases in the minimum wage and a hike in employers' National Insurance (NI) contributions. Chief executive Simon Roberts said the NI bill at Sainsbury's will go up by about £140m in 2025, compared to £120m at M&S.

“This industry operates on very low margins, and there just isn’t the capacity in the structure of the way the supermarket industry works to absorb these levels of costs without some impacts on inflation," Mr Roberts said.


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“I think given the speed these costs are coming at, they will be inflationary. We’ll do everything we can to mitigate that impact but there will be inflationary impacts, because our costs are going up.”

What did the members of the Monetary Policy Committee (MPC) at the Bank of England have to say about the situation? Actually, not as much as many commentators would have liked.

While acknowledging that Budget measures will result in some upward inflationary pressure, the MPC remained as close as it could to neutral on what might happen next. The minutes from the committee meeting earlier this week also made clear that Chancellor Rachel Reeves' tax and spending plan is just one of a number of factors affecting the outlook on inflation, which the Bank has struggled to bring under control.

A further rate cut - traditionally viewed as an inflationary move - this side of Christmas is pretty much off the table, with markets now pricing in fewer than three further quarter-point cuts from here on in.

For the moment the MPC is playing down the impact of the Budget, but with warnings of higher prices coming thick and fast it could merely be the case that the committee is attempting not to tip its hand.