Quote:
Originally Posted by Chrysalis
Government claiming inflation be 2.9% by end of year, not sure what planet they on honestly.
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From of all newspapers the Guardian.
Investment bank Citi said the CPI was likely to fall to 2.3% in November, below the Bank of England’s estimate of a 4% inflation rate the fourth quarter of the year. Fund manager Investec said it could slide to 1.6% by December.
Inflation has remained in double digits since last July – barring a brief drop to 9.9% in August – triggering a wave of pay demands to compensate workers for the loss of spending power.
Most of the increase was due to rising energy and food prices, which Citi’s chief UK economist, Benjamin Nabarro, said were now falling at a faster rate than had been expected at the beginning of the year.
Interest rate rises by the Bank of England are also expected to have a dampening effect on consumer spending, further reducing the pressure on prices.
A slide in inflation to 2% would allow the prime minister to more than fulfil his pledge to halve inflation by the end of the year and make it easier to resolve a wave of public sector strikes over pay.
“The faster reduction in inflation [this year] primarily reflects an easing in pricing pressures, particularly in energy,” Nabarro said, adding that inflation could be as low as 5% by July.
Philip Shaw, chief UK economist at Investec, has forecast a fall in inflation to 1.6% by the fourth quarter, driven by falling energy prices and a squeeze from higher lending rates for 1.5m households that must remortgage this year