The anticipated rise in inflation at the beginning of this year is driven primarily by increased private school fees and higher airfares. As the Consumer Prices Index (CPI) is predicted to increase from 2.5% in December to 2.8% in January, this change is attributed to the impact of VAT hikes on educational costs. Economists have flagged private school fees as a significant variable ('wild card') affecting inflation, especially as airlines increase prices seasonally, potentially driving services inflation above 5% and exceeding the Bank of England's target of 2%.
A hike in private school fees and rising airfares will quicken inflation early this year, expected to rise from 2.5% to 2.8% in January.
Private schools have transferred increased fees to parents after VAT hikes, significantly impacting inflation as costs surge in the educational sector.
Economists at Pantheon Macroeconomics describe private school fees as a 'wild card' with anticipated increases further contributing to inflationary pressures in the economy.
Seasonal price jumps in airline fares for January are also expected to push services inflation above 5%, exacerbating consumer price increases.
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