How is it possible that UK inflation \u2013 currently the highest in the G7 at 3.4% – can be below the 2% target as soon as April?<\/p>\n
For one thing, it would be a significant undershoot of the Bank of England\u2019s November forecasts, which had headline inflation averaging 2.9% through the second quarter.<\/p>\n
Yet below target is exactly where we think we\u2019re heading \u2013 even if only momentarily. We forecast inflation will drop to 1.8% in April before hovering at the 2% target through the spring and summer. What\u2019s more, we think roughly 0.8 percentage points of the decline from December\u2019s reading is virtually locked in \u2013 an artefact of regulated price changes and tax changes.<\/p>\n
If we\u2019re right, it\u2019s another reason to think the Bank has more work to do on rate cuts. Remember, the Bank’s hawks have been particularly sensitive to elevated rates of headline inflation and the risk that this could morph into a more persistent episode of price pressure. We expect cuts in March and June. <\/p>\n
The chart below shows how there\u2019s a range of drivers \u2013 from water and energy bills to school fees \u2013 set to pull inflation down over the next few months.<\/p>\n","protected":false},"excerpt":{"rendered":"How is it possible that UK inflation \u2013 currently the highest in the G7 at 3.4% – can…\n","protected":false},"author":2,"featured_media":407650,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[59,57,58,50,56,54,55],"class_list":{"0":"post-407649","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-united-kingdom","8":"tag-gb","9":"tag-great-britain","10":"tag-greatbritain","11":"tag-news","12":"tag-uk","13":"tag-united-kingdom","14":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/407649","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=407649"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/407649\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/407650"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=407649"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=407649"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=407649"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}