Predictions that falling gas prices will accelerate the decline this year in the consumer prices index (CPI) from last month’s level of 10.1% could also support a recovery in household living standards and persuade the Bank of England to cut interest rates earlier than expected.
Investment bank Citi said the CPI was likely to fall to 2.3% in November, below the Bank of England’s estimate of a 4% inflation rate the fourth quarter of the year. Fund manager Investec said it could slide to 1.6% by December.
Inflation has remained in double digits since last July – barring a brief drop to 9.9% in August – triggering a wave of pay demands to compensate workers for the loss of spending power.
Most of the increase was due to rising energy and food prices, which Citi’s chief UK economist, Benjamin Nabarro, said were now falling at a faster rate than had been expected at the beginning of the year.
Read more at The Guardian
