ANALYSTS’ VIEWS: WHAT WILL TOMORROW’S INFLATION DATA SHOW?
VICKY REDWOOD | CAPITAL ECON
“Inflation now appears to be on a clear downward trend. As the VAT effect drops out, knocking 0.7 per cent or so off inflation, we predict a fall to 3.2 per cent in January – high enough to prompt an explanatory letter to the Chancellor. We expect inflation to be below one per cent by the end of this year.”
MICHAEL SAUNDERS | CITI
“I expect January’s inflation to come in at 3.6 per cent. With demand weakening we expect the MPC will conclude inflation is likely to fall below target two to three years ahead. Such a forecast would bias them to more QE. Given the powerful economic headwinds, the eventual scale of QE is likely to be massive.”
HOWARD ARCHER | IHS GLOBAL INSIGHT
“Data tomorrow are expected to show inflation retreated markedly to a 14-month low of 3.6 per cent. We expect it will trend down steadily to around two per cent by the end of 2012 helped by the waning impact of sharply rising oil, commodity and food prices in early 2011, and by weak economic activity and elevated unemployment.”