Burnham says fiscal stability is key to change as energy and inflation pressures mount

Andy Burnham says stable public finances are essential to the changes he wants to make, as rising energy costs and inflation put pressure on households and narrow the government’s room for choices in its October Budget. The prime minister acknowledged in an interview published Saturday that the fiscal position was challenging ahead of his first Labour conference as leader.

In the Guardian interview, Burnham said stability was ‘crucial’ before pursuing larger changes. He said the government had to face difficult decisions while working within the fiscal commitments it inherited. His promise comes as the Bank of England warns that the duration of higher energy prices will shape the outlook for inflation and interest rates.

What the figures show

Consumer price inflation reached 3.1% in the 12 months to August, up from 2.9% in July, according to the Office for National Statistics. The ONS said transport costs, particularly motor fuels, made the largest upward contribution to that increase.

The Bank of England held its policy rate at 3.75% in September, with three of nine committee members voting for an increase. Its published minutes said oil and wholesale gas prices had risen sharply since its July report. The Bank expects inflation to rise further, but said the scale and duration of the energy shock remain uncertain.

The Bank’s September projections, based on energy prices as of 14 September, put consumer price inflation at around 3¾% in the final quarter of 2026 and slightly above 4% in the first quarter of 2027. It also expected the household energy price cap to rise substantially in that first quarter. Those are forecasts, not confirmed bills or inflation readings.

The Budget choice

Guardian economics analysis published Sunday described higher government borrowing costs alongside the energy and inflation pressures. Burnham has said he wants to give households breathing space, but has played down the prospect of a large new energy support package, pointing to measures already taken. The eventual cost of energy and the government’s fiscal position will depend on how prices and borrowing conditions develop before the Budget.