Inflation expected to dip slightly before heading back uppublished at 06:41 British Summer Time
Marc Ashdown
Business correspondent
Inflation may have cooled from its red hot 11.1% in October 2022 – but the pace of price rises remains stubbornly above the Bank of England’s target of 2%.
Economists expect the March figure we’ll get shortly will show a tiny drop from the previous month to around 2.7%. But they think the rate will tick up again to around 3% over the coming months, and peak at around the 3.7% mark in the autumn.
That’s because a raft of household bills went up this month and businesses are feeling the pinch from extra costs.
Their energy costs have gone up, so too has the price of raw materials. The main pressure is coming from extra staffing costs, however, after increases in the minimum wage and employer National Insurance contributions.
The volatility around global trade could also stoke further price rises.
Some respite could come from the price of fuel. Motorists have seen an average of 4p per litre cut from the price of petrol and diesel in recent weeks.
And with crude oil trading at around $10 (£7.6) a barrel lower than at the start of the year, the RAC motoring group told us it is expecting a further significant fall in prices at the pumps.
All this will feed into the Bank of England’s calculations. Its Monetary Policy Committee is expected to cut interest rates in May, with up to three more cuts possible by the end of the year.
The necessity to put money into the pockets of households and businesses to get the economy firing is outweighing concerns that the pace of price rises could heat up once more.
