Inflation unchanged, core inflation up: this is now the biggest challenge facing government What’s worrrying Government is that raising interest rates is meant to curb spending and in turn cool economy and bring down inflation…. … but that’s not working. People aren’t (yet) responding to the rate rise squeeze. People still spending. Little evidence of payment problems and defaults. People relying on savings. Rate rises isn’t having effect it should So they’re concerned traditional economic levers not working, but there aren’t alternatives ….