Inflation has been at the Bank's target of 2 per cent for two months but is set to rise
The Bank of England cut interest rates for the first time in four years in August but warns inflation hasn’t been beatenInflation is expected to have risen above the Bank of England’s target level of 2 per cent, experts predicted ahead of figures being released on Wednesday.The Bank of England forecasts that inflation will rise to 2.4 per cent in July’s CPI data. Pantheon Macroeconomics suggests it will go up to 2.3 per cent, as does Deutsche Bank Research.
So while energy prices deflated dramatically in the 12 months leading up to April to June 2024, dragging the headline inflation figure down, the deflation is less dramatic in July. “Positive base effects, mainly from energy prices, will likely push headline inflation higher through the second half of 2024. But there is good news. Services inflation, we expect, should continue its descent – albeit gradually,” said Sanjay Raja of Deutsche Bank Research.
“We expect CPI services inflation to slow to 5.5 per cent but uncertainty is high because of volatile hotel prices.”Interest rates fell last week from their 16-year high of 5.25 per cent to 5 per cent, with the Bank of England cautioning that rates would probably not go down quickly.
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