Week Ahead

Inflation could hit 2% target ahead of Bank meeting

Money cash
The cost of living has been falling sharply

Inflation is forecast to fall close to the Bank of England’s 2% target, though the Bank of England is not expected to cut interest rates at next week’s meeting.

Analysts say consumer price inflation for May should fall from the previous month’s 2.3% to 2.1% and possibly to the target as it continues its sharp decline following last year’s steep rise.

May’s projected drop in inflation is likely to be driven by a reversal in the rise in services inflation recorded in April and by wet weather which has hit retail sales.

It will mean the rate of price rises has hit the central bank’s target for the first time in almost three years.

The figures will be released ahead of the Bank’s monetary policy committee meeting which is not expected to produce a cut in the interest rate.

A majority of the nine-member committee will almost certaintly vote to keep the base rate unchanged for a tenth consecutive month at 5.25%

Two members of the MPC voted for a 25 basis points cut at the last meeting, and despite persistent wage growth, the direction of the economy is likely to see that rise to a majority at the following meetings.

Analysts now expect a cut in August or September which will give a lift to the new UK government.

DIARY

Monday 17 June

  • Rightmove UK house price index
  • G7 meeting starts in Puglia, Italy (runs all week)

Tuesday 18 June

  • Full-year results from Telecom Plus
  • Trading updates from Whitbread and SThree

Wednesday 19 June

  • Full-year results from Berkeley Group and Young’s Brewery
  • UK inflation

Thursday 20 June

  • Full-year results from Syncona and Urban Logistics REIT
  • Interest rate decision from the Bank of England


Leave a Reply

Your email address will not be published. Required fields are marked as *

This site uses Akismet to reduce spam. Learn how your comment data is processed.