ATION will come in above target for the 38th straight month when data for January is released tomorrow, analysts have predicted.
The consumer price index (CPI) will show inflation of 2.6 to 2.7 per cent, City economists said, marking yet another month above the Bank of England’s two per cent target, with aggressive discounting in non-food retail balanced out by rising restaurant and transport insurance prices.
But yet another missed inflation target is unlikely to spur the Bank into tighter monetary policy – higher rates or rolled back quantitative easing (QE), Philip Shaw at Investec hinted.
Shaw predicted that Wednesday’s quarterly Inflation Report would forecast inflation crashing through the three per cent barrier at some point in the year. If this came after July, it could require incoming governor Mark Carney to write his first explanatory letter to chancellor George Osborne, Shaw pointed out.