P14 INFLATION PANIC: IT’LL BE OVER BY CHRISTMAS*

CHRIS DORRELL

INFLATION WILL return to close to the Bank of England’s two per cent target by the end of the year –in 2025.

According to forecasts from the National Institute of Economic and Social Research (NIESR), inflation is forecast to fall to 5.2 per cent by the end of this year, before falling to 3.9 per cent by the end of 2024.

Beyond next year, the think tank forecasts inflation to fall to 2.3 per cent in 2025, with it remaining marginally above the two per cent target until at least 2027.

NIESR also warned that there were “significant risks” to its forecasts which could result in inflation being higher than anticipated.

The forecasts come despite the latest inflation figures showing a faster than expected drop in inflation. In June, inflation increased 7.9 per cent on last year, the slowest rate since last March.

“While headline inflation eased by more than expected in June, it remains the case that we have yet to see a significant movement in underlying inflationary pressures in the economy,” NIESR said.

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Electoral Commission

Cyberattack exposes UK voter data

ANNA MOLONEY

THE ELECTORAL Commission yesterday apologised after it was revealed its systems had been the subject of a cyberattack, exposing the names and addresses of 40m UK voters to “hostile actors”.

The hack, which went undetected for 14 months after first breaching the commission’s systems in August 2021, gave the attackers access to copies of electoral registers from between 2014 and 2022. The attack was publicly disclosed yesterday, after being discovered last October.

NIESR pointed out that although high energy costs have now “fallen out” of the CPI index, other components –such as food and services –were now driving price increases.

“As a result of the original inflation shock, inflationary pressures have permeated indirectly to other areas of the economy,” the report said, which would likely force the Bank of England to tighten monetary policy further.

Stubborn inflation could also indicate that “a behavioural change has taken place... which is maintaining inflation above target despite monetary tightening”.

Higher for longer inflation could cause major headwinds for growth as it would lead to tighter credit conditions, which would pile more pressure onto businesses and households.

Amid persistently high inflation, NIESR predicted that it will take until the end of 2024 for UK GDP to surpass its pre-pandemic level, with the think tank highlighting five years of lost economic growth.

Although the UK is forecast to avoid a recession, GDP is expected to grow just 0.4 per cent this year and 0.3 per cent in 2024 –an election year.

The Electoral Commission said the breach was unlikely to lead to a meddling in elections due to the “dispersed” and largely paper-based UK voting system.

“We know which systems were accessible to the hostile actors, but are not able to know conclusively what files may or may not have been accessed,” Shaun McNally, the Electoral Commission’s chief executive, said. Significant measures have now been taken to improve security, he added.

Andrew Rose, the chief information security officer for Europe at US cybersecurity firm Proofpoint, said the attack was “no surprise” but “still incredibly serious as undermining the democratic process”.

The Information Commissioner’s Office said it was looking into the incident.