KPMG comments on today’s inflation figures

“Despite a January reprieve, inflation to hit households hard” says Yael Selfin, Chief Economist at KPMG UK.

“Despite a January reprieve, inflation to hit households hard”

“Despite the slight ease in inflation in January, we expect it to accelerate to 7.5% in April as the impact of the increase in energy tariffs takes effect, with low-income households facing the biggest proportional increase in costs. Inflation rose to 5.5%, a nearly 30-year high, as prices fell by 0.1% in January.

“The combination of policy action and slowing price rises should see the headline rate of inflation return to 2% by the end of next year. However, forecasts are clouded by an unusual level of uncertainty, with risks to both the upside and the downside. Stronger wage pressures could see inflation become more persistent, while a faster resolution of supply chain problems could see the prices of heavily affected items, such as used cars, fall more quickly.

“The Bank of England has signalled a determination to get ahead of the curve on inflation, with another interest rate rise earlier this month and potentially at least two more rate rises later this year. In the short run, this will add to the squeeze on incomes as lenders pass on the rate increase to borrowers.”

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About KPMG

KPMG LLP, a UK limited liability partnership, operates from 22 offices across the UK with approximately 15,300 partners and staff.  The UK firm recorded a revenue of £2.43 billion in the year ended 30 September 2021.

KPMG is a global organisation of independent professional services firms providing Audit, Legal, Tax and Advisory services. It operates in 145 countries and territories with more than 236,000 partners and employees working in member firms around the world. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG International Limited is a private English company limited by guarantee. KPMG International Limited and its related entities do not provide services to clients.

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