Our panel of City economists considers that while inflation is unlikely to rise in the short term, it is likely to remain at or above 3% over the coming 18 months. The prospects for inflation are probably best summarised in the Bank of England’s recent Inflation Report, released on 10 May. It said: ‘Conditional on market interest rates, domestic inflationary pressures are projected to build over the forecast period while the contribution from energy and import prices dissipates.’
The latest instalment in the debate over which inflation indicator is the most appropriate for uprating benefits such as pensions took place in the High Court in January. The case, brought by telecoms firm BT, was that the company should be allowed to change provisions for uprating pension payments from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI), on the basis that the former had ‘become inappropriate’, according to the rules of the scheme. The case has implications for setting pay as well as pensions.
The latest inflation forecasts from our panel of City economists indicate that the cost of living, as measured by the all-items RPI, could reach 3% or higher in May 2017, with the release of official figures for the year to April 2017. Continue reading RPI inflation could reach 3% by spring 2017
Inflation as measured by the all-items Retail Prices Index (RPI) fell slightly this month, to 1.8% in the year to August 2016, down from 1.9% in the year to July, according to the latest figures from the Office for National Statistics (ONS). Continue reading RPI drops back slightly