NIESR: UK PM Sunak may fall short on 2023 inflation goal
|“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.
Extra details
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.
Also read: GBP/USD Price Analysis: Cable turns defensive above 1.2600 on BoE “Super Thursday”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.