"Economists across the city suggest its downhill from here, after the inflation rate for September remained static at 3.8%, failing to breach the expected 4% mark. In absolute terms inflation remains too high, higher than other similar countries, and too visible in the everyday items seen in the shops. Just under double the official target of 2% set for the Bank of England."
"However, it is worth remembering that even as the International Monetary Fund (IMF) pointed to the highest inflation in the G7 this year and next, it also said inflation would fall back to the 2% target by the end of next year. Crucially retail industry experts now assert food price inflation has also peaked, though prices remain at painful levels for many. This lowers - though does not eliminate - the chances of self-fulfilling expectations of inflation in the way wages and prices are set."
"My immediate thought was the "Santa" rate cut from Andrew Bailey may be back on the table for December. But then I looked again at the information underlying some of last week's numbers from the IMF. Buried in the forecast is the suggestion of four rate cuts over the next year to take interest rates down to 3%. The only reason a cut is not expected next month, according to the IMF, is because it is too close to the Budget."
Inflation in September held at 3.8%, above the Bank of England's 2% target and higher than comparable countries, with visible price pressure in shops. Regulated price rises from last year will drop out of calculations in spring, creating scope for significant falls and possibly 2.5% by April. The IMF forecasts the highest G7 inflation this year and next but expects a return to the 2% target by the end of next year. Retail experts report food-price inflation has peaked, reducing the risk of entrenched expectations. The IMF implies up to four rate cuts toward 3%, while US Fed cuts influence markets.
Read at www.bbc.com
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