In January, the UK experienced an unexpected rise in inflation, with the headline CPI increasing to 3.0%, surpassing the predicted 2.8%. Core and services inflation also rose sharply, yet these figures met or fell below expectations, indicating manageable inflationary pressures. The Bank of England must navigate supporting economic growth while addressing inflation remaining above target throughout the year. Cebr forecasts that the Bank will likely postpone any additional rate cuts until the latter half of the year, highlighting the complex economic landscape ahead.
UK inflation increased unexpectedly in January, rising to 3.0% as concerns about economic growth juxtapose with sustained inflation above targets throughout the year.
Despite sharp rises in core and services inflation, they remained in line or below expectations, suggesting underlying inflationary pressures are still manageable.
The Bank of England faces a delicate challenge in 2025, needing to support economic growth while managing inflation that is expected to stay elevated.
Cebr anticipates that the Bank of England will refrain from further rate cuts until at least the latter half of the year.
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