Yael Selfin, Chief Economist at KPMG UK, comments on today’s inflation figures
Yael Selfin, Chief Economist at KPMG UK, comments on today’s inflation figures:
“A subdued rise in prices during March this year saw inflation (as measured by CPI) moderate to 2.5%, halfway between the 3% rate we saw at the start of the year and the Bank of England’s target of 2%. Softer pricing in discretionary purchases, such as clothing and alcoholic beverages helped moderate inflation, while a weaker housing market saw the price of furniture fall.
“With most of the effect of the earlier fall in Sterling now behind us, inflation is expected to remain closer to its 2% target than during most of last year. However, the strong external economic environment and diminishing spare capacity in the domestic economy mean we are likely to see a more modest reduction in inflation during the rest of this year.
“The MPC is therefore likely to raise interest rates in its May meeting, as part of a gradual course in tightening monetary conditions in the UK, although rates are likely to remain lower than in earlier cycles.”
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