'Out of her depth' Rachel Reeves criticised over her handling of the economy as inflation rises to 3%

19 February 2025, 09:02 | Updated: 19 February 2025, 11:25

Chancellor Rachel Reeves has been blasted by the Tories as “out of her depth” after inflation figures jumped to 3%, nearly the highest level in nearly 10 months.

The figure, released on Wednesday by the Office for National Statistics (ONS), marks a rise of 0.5%  in the 12 months to January 2025. The consumer prices index (CPI) stood at 2.5% in December.

This rate is higher than both Germany and France, with 2.8% and 1.8% levels respectively. It means inflation now sits above market and Bank of England expectations.

The Conservatives have blamed this on the Chancellor's tax raid in the Budget, which they warned is causing "misery for millions".

Shadow Chancellor Mel Stride said: “Today’s figures mean further pain for family finances – and it's thanks to the Labour Chancellor's record tax hikes and inflation busting pay rises. 

“Labour were warned that their tax spending and borrowing spree would drive up inflation. It means higher prices in the shops, and interest rates staying higher for longer, causing mortgage misery for millions.

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“This Chancellor is out of her depth, and we're all paying the price.”

Following the news inflation has risen, Chancellor of the Exchequer, Rachel Reeves, said she "knows that millions of families are struggling"

“Getting more money in people’s pockets is my number one mission," the Chancellor said."Since the election we’ve seen year on year wages after inflation growing at their fastest rate – worth an extra £1,000 a year on average – but I know that millions of families are still struggling to make ends meet.

"That’s why we’re going further and faster to deliver economic growth," she continued."By taking on the blockers to get Britain building again, investing to rebuild our roads, rail and energy infrastructure and ripping up unnecessary regulation, we will kickstart growth, secure well paid jobs and get more pounds in pockets.”

The Bank of England expects consumer price inflation to peak at 3.7% in the third quarter of the year. The figure is almost double the government's 2% target.

Reeves has come under repeated criticism for her £40 billion tax raid in the autumn Budget.

Economists have said higher independent school fees, linked to the scrapping of the VAT exemption by Labour, have been a factor in pushing up inflation.

Her £25 billion National Insurance hike for employers has prompted major warnings from business leaders, who have raised the alarm over plunging business confidence and fewer jobs.

Employers also face further bills hikes from April when the National Living wage rise by 6.7 per cent to £12.21 an hour.

Meanwhile, from April 2027, another Reeves' policy will force 31,200 families to pay inheritance tax for the first time.

Farmers have warned family-run businesses across the UK face ruin due to the policy, staging multiple protests against the measure in the London.

The family farm tax is only expected to raise around £115 million a year – less than 0.01 per cent of government spending and less than 0.3 per cent of all the tax rises announced by Reeves in the Budget.

Reeves also announced capital gains tax rises, with the lower rate surging from 10 per cent to 18 per cent and the higher rate from 20 per cent to 24 per cent.

The stamp duty land tax surcharge for second homes will rose by two percentage points to five per cent.

Meanwhile, Reeves has recently comes under pressure for alleged inaccuracies in her CV.

The Chancellor has updated her job history on professional networking site LinkedIn to reflect she worked at Halifax Bank of Scotland (HBOS) for longer than she had previously said.

The Chancellor's page had previously suggested her stint at the Bank of England, which she has previously referenced to reinforce her credentials, lasted months longer than it now says.

Her use of expenses during her time working for HBOS was also subject to an internal investigation, according to reports, but a spokesperson for Ms Reeves has claimed she was not aware of the probe.