Chancellor Rachel Reeves is set to unveil a comprehensive cost of living package on Thursday, aiming to reduce the weekly shopping bill by slashing tariffs on more than 100 essential food items until 2028. The move is designed to shield British households from rising prices triggered by the ongoing conflict in Iran.
Tariff Reductions on Staple Goods
The government will temporarily remove tariffs on a wide range of products, including tomato ketchup, marmalade, biscuits, baked beans, crisps, and margarine. Tariffs are taxes imposed on imported goods, and their reduction could lead to lower prices for consumers, provided businesses pass on the savings.
Additional Measures to Ease Financial Pressures
In her statement to Parliament, Ms Reeves is expected to announce several other money-saving initiatives. These include fare-free bus travel for schoolchildren in England throughout August, providing families with a summer boost. Drivers will also benefit from a freeze on fuel duty until the end of the year, scrapping previously planned increases that were due to take effect in September. This decision comes amid rising fuel prices following the closure of the Strait of Hormuz, a critical waterway for global oil and gas supplies.
Support for Hauliers
Hauliers will receive a 12-month road tax holiday, reducing their renewal fee to just £1. This measure is intended to help keep shelves stocked and food prices down, saving a typical heavy lorry £600 and the largest vehicles up to £912.
Chancellor's Statement
Ms Reeves emphasised her commitment to protecting households from rising costs. 'My number one priority is protecting households from rising costs. This summer I want every family to be able to enjoy themselves, that's why we're launching the Great British Summer Savings Scheme, and why we're helping kids with free bus travel throughout August,' she said. She added that her economic plan is the right response to the pressures caused by the war in Iran.
Prime Minister's Support
Prime Minister Keir Starmer reiterated the government's stance, stating he would 'tear down the status quo' to shield working people from global crises. Writing in the Mirror, he contrasted the government's approach with that of the previous Tory administration, declaring that 'this Government will always stand by them' and build a stronger, fairer Britain.
Economic Context
The package comes as inflation fell to 2.8% in April, down from 3.3% in March, marking the lowest level since March 2025. However, this decline, driven largely by a lower energy price cap, is expected to be temporary as the fallout from the Middle East conflict spreads. Emergency planning is underway for the winter, with energy bills predicted to rise. The price cap is expected to increase by £209 to £1,850 per year for a typical household from July, and further rises are anticipated when the cap is reviewed in September.
The Chancellor is expected to target energy bill support towards low-income households, but she will wait until September to finalise the package. She has ruled out a universal bailout similar to Liz Truss's approach in 2022, fearing that unfunded giveaways could push up borrowing costs and inflation, leading to higher mortgage rates.
Incident at Petrol Station
During an interview at a petrol station in Leeds, Ms Reeves was heckled by a man driving a truck adorned with St George's flags. He shouted 'Nigel Farage, go on Nigel' and accused her of ruining the country. Ms Reeves responded calmly, saying 'I love our country... and one of the things about our country is good manners. Not very British.' She later quipped that he hadn't heard the news about fuel duty.
