The Bank of England is paying higher taxes due to its cautious approach in addressing price increases. It has increased credit costs from 3.75% to 4%, following a chaotic response to inflation pressures. According to the National Institute of Economic and Social Research (NIESR), this decision is likely to make inflation persistent above the target rate of 2%.

The think tank warns that if the Bank does not take more severe measures, inflation will become embedded in the economic system, with workers demanding wage increases in terms of prices. The UK economy is registering an inflation rate of 3.5%, higher than the target rate of 2%, driven by high oil prices and water and gas prices since Iran launched a war against the US and Israel. Oil prices have risen dramatically since February when the US and Israel launched a war against Iran.

Brent crude has reached over $100 per barrel in the last weeks – compared to $70 before the war – but has fallen below $90, reaching its lowest level since August 31st, after Donald Trump denied the need for a military strike against Iran