Economists forecast that inflation will dip below 2% by April or May, offering relief to mortgage holders anticipating a decrease in interest rates.
Deutsche Bank analysts have observed a potential sharp decline in inflation from the 3.9% rate recorded in November. They released a research note this morning predicting that inflation will average 2.5% in 2024, a reduction from their earlier estimate of 2.7%.
According to Deutsche Bank, inflation is expected to fall slightly below 2% in April and May, then stabilize between 2% and 2.5% for the rest of the year.
To curb inflation to its 2% target, the Bank of England has escalated interest rates to a 16-year peak of 5.25%. In October 2022, inflation surged at an 11.1% annual rate, marking a 41-year high.
Bank of England Governor Andrew Bailey informed MPs today that the UK has not experienced a significant rise in unemployment, and household incomes have increased in recent months. This has helped mitigate the impact of higher borrowing costs.
