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Inflation in the UK WILL DECREASE dramatically shortly.
We’ve pointed out on many occasions that inflation will start dropping extremely quickly from February onwards. As you can see from the chart below, February, March, April and May of 2023 were all high inflationary numbers accounting for 3.8% of the UK’s 4% year-over-year Consumer Price Index.
On March 20th, the 1.1% increase will no longer be counted in the annual figure, and it will be replaced by a number close to 0%. The UK’s 4% inflation could even dip below 3% for the first time since the summer of 2021.
After that, we lose a 0.8% followed by a 1.2%. If inflation doesn’t start to increase around that time, it will come in below the BoE’s 2% target. The question is, will they cut before it happens and pre-empt the results, or will they wait?
Empirical evidence will suggest that they’ll wait, as moving too soon would be political suicide. It’s not the right call, but it might be the safest call. One thing is for sure though, the cuts need to come before the summer.
