INFLATION TO ‘FALL TO 2%’ BY DECEMBER

City Analysts Reckon Lower Energy Prices Could See Bank Of England Back At Target By End Of 2023

JACK BARNETT

INFLATION in the UK is on track to fall exactly back to the Bank of England’s target by the end of this year, according to forecasts by two top City of London economists.

The rate of price increases will tumble to two per cent in the final three months of 2023, according to Pantheon Macroeconomics.

By November, the firm reckons the cost of living could even tip just below the two per cent threshold to 1.9 per cent before bumping up two per cent in December.

A colossal unwinding in international energy prices after they surged to record highs last summer, pushed higher by Russia’s invasion of Ukraine rocking global oil, gas and electricity prices, is poised to drive UK inflation rapidly lower this year.

Bank of England economists are less optimistic about the inflation outlook, forecasting it will more than halve to around four per cent by Christmas, still more than double their two per cent target.

Separate projections by investment bank Citigroup chimed with Pantheon’s predictions. They suspect inflation is on track to slip to 2.3 per cent in November.

If the pair’s bets do play out, it would unfold one of the fastest inflation declines ever, stumbling from a peak of 11.1 per cent in October. The rate has already dropped for three straight months to 10.1 per cent.

Britain is on the brink of slipping into a recession, ignited by households and businesses responding to inflation eroding their finances by cutting spending, which should put downward pressure on prices.

Ten successive rate rises, approved by Andrew Bailey and the Bank’s Monetary Policy Committee, have put the interest rate at four per cent –enough to chill economic activity. The next meeting of the Committee is on 23 March. A faster than expected inflation drop is set to lower government spending on servicing the UK’s debt pile, which is nearly 100 per cent of GDP. A big chunk of the debt stock is tied to the retail price index, an old measure of inflation.

Numbers from the Office for National Statistics this week revealed the UK has borrowed around £30bn less than the Office for Budget Responsibility projected, helped by a more than £5bn fiscal surplus last month.

MARK KLEINMAN THE COLUMN THAT GETS THE CITY TALKING P6

THE UK government will today publish a long-awaited white paper on its plans for an independent regulator for English football.

The policy document will propose the introduction of a regulator tasked with stopping financial failings from occurring lower down in the pyramid, as well as a stronger owners’ and directors’ test.

Fans will be given a greater say in how clubs are run, while there will be powers to stop teams joining European Super League-style breakaways.

It follows recommendations made by Tracey Crouch MP after her football governance review.

“Despite the success of the sport, we know that there are real challenges which threaten the stability of clubs,” Prime Minister Rishi The body will cover the football pyramid.

LEAGUE REACTION: P24