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Inflation set to return close to 2% target in boost for Bank of England – live

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(PA) (PA Wire)

UK inflation could get near the Bank of England’s target of 2 per cent when the figures are released on Wednesday, experts have forecast.

The Consumer Prices Index (CPI) fell to 3.2 per cent for March, compared with the previous year, and economists polled by Reuters think that inflation could drop to 2.1 per cent.

This would mark the lowest level since July 2021 when inflation was recorded at 2 per cent – the Bank of England’s target level.

Lower gas and electricity prices compared with the prior year are expected to be the key driver behind price rises cooling last month.

Experts said April’s data could be “make or break” for the Bank, which has been waiting for firm evidence that CPI has reached its target level before it can cut interest rates.

UK borrowing costs are currently at a 16-year high of 5.25%, and the Bank’s Monetary Policy Committee is next due to meet in June.

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Welcome

Good evening, and welcome to our inflation blog that will cover analysis and reaction to the figures that are due to be released on Wednesday.

Joe Middleton21 May 2024 19:30

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What is inflation?

The Bank of England (BoE) defines inflation simply as a term used by economists to “describe the increase in prices over time”.

Rising costs of goods and services on the UK high street indicate that the value of the British pound is in decline, which in turn means a reduction in consumers’ purchasing power and therefore their quality of life, as they are discouraged from spending more than they can afford.

This in turn eats into national economic growth.

Joe Middleton21 May 2024 20:30

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April’s data could be ‘make or break’ for the Bank of England

Experts said April’s data could be “make or break” for the Bank, which has been waiting for firm evidence that CPI has reached its target level before it can cut interest rates.

James Smith, a developed markets economist for ING, said: “It’s no exaggeration to say that this week’s UK inflation data will make or break a June rate cut from the Bank of England.

“The result is that headline inflation will, we think, dip below the Bank of England’s 2% target in May’s data due in June and stay there for most – if not all – of this year.

“But in the very short term, there’s still some uncertainty over services inflation.

Joe Middleton21 May 2024 21:30

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NewsBusiness UK inflation predicted to drop close to Bank of England’s 2% target

UK inflation could get close to the Bank of England’s target of 2 per cent when the latest figures are released by the Office for National Statistics (ONS) on Wednesday.

The Consumer Prices Index (CPI) dropped to 3.2 per cent for March, compared with the previous year, and forecasters polled by Reuters think inflation will drop to 2.1 per cent for April.

Pantheon Economics predicts a slightly lower figure of 2 per cent and Capital Economics thinks that it could dip even lower to 1.9 per cent. The Bank of England’s (BoE) own forecast is 2.1 per cent.

Joe Middleton21 May 2024 22:30

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Watch: What is inflation?

What is inflation? | Decomplicated

Joe Middleton21 May 2024 23:30

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