Category Archives: Inflation

Inflation predicted to slowly fall during 2018

All of our panel of City economists see RPI inflation peaking in the next month or two and thereafter coming slowly down. Our rounded average of the predictions from seven City forecasting bodies shows the RPI, which is currently at 4% for the year to October, falling to 3.6% in the year to February. The February figure will be released in mid-March and as such will be the extant measure when many companies’ April 2018 pay reviews take place.

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Forecasters think inflation could rise to just below 4% by autumn

Inflation could rise to just below 4% on the all-items RPI measure by the autumn, according to our panel of City economists. Thereafter it could fall, but slowly. This assessment is based on our rounded average of the predictions from eight forecasters. The panel divides evenly between those who see RPI reaching 4% and those who think it is unlikely to rise this far. The main point of difference is based on whether the upward pressure on import prices from sterling’s previous depreciation, following the vote to leave the EU, have mainly worked through, or whether most of these effects remain to be felt. Continue reading Forecasters think inflation could rise to just below 4% by autumn

Assumptions revised about the likely path of inflation

Inflation forecast to rise to 4% by late summer

After the sharp rise in RPI inflation in the year to February, economic forecasters have had to revise their assumptions about the likely path of inflation. Inflation rose to 3.2% in the year to February, up from 2.6% in the year to January. The increases were higher than predicted, and were due to increases in prices for oil and petrol on the one hand, and food on the other. In the case of food prices, increases are mainly caused by the impact of sterling’s depreciation.

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ONS prefers CPIH measure

The Office for National Statistics has announced that it is to make the CPIH its preferred measure of inflation, from March 2017. The CPIH, which includes a measure of housing costs, based on ‘imputed rents’, will take over from the CPI – which does not include any measure of housing costs – as the government’s main measure of changes in the cost of living. The switch to the CPIH is an attempt to overcome the shortcomings of the CPI in this respect. Continue reading ONS prefers CPIH measure