NIESR Press Note – Head of UK Macroeconomic Forecasting reacts to the latest CPI inflation data released today
*FOR IMMEDIATE RELEASE*
NIESR’s Head of UK Macroeconomic Forecasting, Amit Kara said: “Annual CPI inflation was unchanged at 3.0 per cent in October. Although today’s outturn is just below the level that automatically triggers an explanatory letter from the Governor to the Chancellor, CPI inflation is set to remain stubbornly above the target rate of 2 per cent until at least mid-2019 on our forecast. Household disposable income will be squeezed as a result.”
He added: “Today’s inflation data comes alongside other data that point to slightly higher economic growth in the second half of this year. This requires a gradual withdrawal of monetary policy stimulus to stop the economy from overheating especially if, as we expect, productivity growth remains weak in the UK. Consistent with that, our latest forecast is conditioned on a 25 basis points increase in Bank Rate every six months such that the policy rate reaches 2 per cent in 2021”
Notes for editors:
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