# UK energy bill help won’t lower inflation, statisticians rule Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2022-08-31 Category: NEWS Category URL: https://financedigest.com/category/news Meta Title: British Govt Energy Bill Rebates Not Lowering Inflation - Meta Description: Find out why official statisticians ruled out energy bill rebates as a way to lower inflation rates, impacting government debt interest costs. URL: https://financedigest.com/uk-energy-bill-help-wont-lower-inflation-statisticians-rulehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-31t092154z3lynxmpei7u06krtroptp4britain-meat-1736815329371-compressed.jpg) By Andy Bruce LONDON (Reuters) -British government energy bill rebates for households cannot be viewed as lowering inflation, official statisticians said on Wednesday, ruling out the possibility of a modest reduction to rates of price growth that are running at 40-year highs. Economists and bond investors had been looking closely at whether statisticians would classify the support packages as price cuts for consumers that would directly lower headline inflation rates – and with it debt interest costs for the government arising from inflation-linked bonds.However, the Office for National Statistics (ONS) ruled that the [Energy Bills Support](https://www.financedigest.com/energy-bill-support-pushes-uk-budget-deficit-to-february-record.html "Energy bill support pushes UK budget deficit to February record") Scheme (EBSS) should be treated as increasing household income rather than reducing their expenditure. “Therefore… the payment will not affect either the Consumer [Prices Index including owner occupiers’ housing](https://www.financedigest.com/uk-house-prices-stabilise-after-four-month-fall-halifax-says.html "UK house prices stabilise after four-month fall, Halifax says") costs (CPIH), the Consumer Prices Index (CPI) or the Retail Prices Index (RPI),” the ONS said in a statement. Economists had widely expected such a decision after the ONS [ruled similarly on how to treat a government](https://www.financedigest.com/italys-rightist-government-tightens-rules-for-migrant-rescues.html "Italy’s rightist government tightens rules for migrant rescues") rebate for council taxes during the COVID-19 pandemic. British consumer price [inflation hit a 40-year high of 10.1% in July – more than five times the Bank of England’s](https://www.financedigest.com/bank-of-england-still-needs-to-see-the-job-through-on-inflation-pill.html "Bank of England still needs to ‘see the job through’ on inflation: Pill") 2% target. Had the EBSS been classified as a price cut, this might have pushed the [targeted measure of inflation](https://www.financedigest.com/the-mouse-that-roared-new-zealand-and-the-worlds-2-inflation-target.html "The mouse that roared: New Zealand and the world’s 2% inflation target") down by roughly 0.3%-0.4% for six months,” said Philip Shaw, chief economist of Investec bank. It is [important to note that today’s ruling has no impact on the direct position of consumers.”](https://www.financedigest.com/u-s-inflation-outlook-brightens-as-import-prices-fall-consumer-sentiment-rises.html "U.S. inflation outlook brightens as import prices fall, consumer sentiment rises") Earlier this week Goldman Sachs said inflation could top 22% [early next year if spiralling gas prices fail](https://www.financedigest.com/are-the-over-55s-accessing-their-pensions-early-failing-to-plan-for-later-life.html "Are the over-55s accessing their pensions early failing to plan for later life?") to come down, although its base case was for a peak of 14.8%. Announced in May when energy price forecasts were much lower, the EBSS comprises 400 pounds ($470) of discounts on [household bills](https://www.financedigest.com/44-of-uk-households-are-worried-theyll-have-to-foot-the-bill-for-net-zero.html "44% of UK Households are Worried They’ll Have to Foot the Bill for Net Zero"), paid in installments over six months starting in October. The two candidates to become [Britain’s next prime minister – Foreign Secretary Liz Truss and former finance minister Rishi Sunak – have clashed over how to respond to soaring](https://www.financedigest.com/britain-delays-major-rail-project-hs2-as-costs-soar-again.html "Britain delays major rail project HS2 as costs soar again") energy prices, with the front-runner Truss initially saying she would rather cut taxes than give “handouts. Both contenders have acknowledged that the poorest in [society will need support](https://www.financedigest.com/supporting-a-fair-and-resilient-society-by-protecting-access-to-cash.html "Supporting a fair and resilient society by protecting access to cash "). The [leadership race ends](https://www.financedigest.com/spains-grifols-names-current-chairman-as-ceo-ending-family-leadership.html "Spain’s Grifols names current chairman as CEO, ending family leadership") on Monday. ($1 = 0.8564 pounds) (Reporting by Andy Bruce; Editing by William James and Nick Macfie) --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---