“British Prime Minister Rishi Sunak risks missing his goal of halving inflation this year as underlying inflation shows little sign of having peaked in Britain or abroad,” per UK think-tank National Institute of Economic and Social Research (NIESR) reported Reuters on early Thursday in Asia.
NIESR estimated annual consumer price inflation will be 5.4% in the final quarter of 2023 – well above forecasts from the Bank of England and the government’s budget watchdog.
NIESR projected full-year consumer price inflation would be 7.4% in 2023 and 3.9% in 2024.
NIESR expects the BoE to raise its key interest rate later on Thursday to 4.5% from 4.25%, in what would be its 12th consecutive rate increase.
BoE is unlikely to bring inflation back to its 2% target until late 2025.
Sunak said in January one of his 2023 goals would be to halve inflation, which in December was 10.5% and averaged 10.7% across the final quarter of 2022.
NIESR’s forecast for inflation at the end of this year is well above the 2.9% pencilled in by the Office for Budget Responsibility in March or the BoE’s 3.9% projection from February, which is due for a quarterly update later on Thursday.
NIESR expects high inflation since the start of the pandemic to leave Britain’s poorest fifth of households an average of 4,000 pounds ($5,000) a year worse off.
NIESR is more optimistic about the outlook for economic growth than many forecasters, predicting gross domestic product will rise 0.3% this year and 0.6% in 2024.
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