Inflation expected to stay above 2%

Inflation is expected to remain just above the Bank of England's 2% target when official figures for November are published tomorrow.

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Howard Archer, of IHS Global Insight, said indications from the retail sector showed food prices may have edged lower in November

Inflation is expected to remain just above the Bank of England's 2% target when official figures for November are published tomorrow.

The Consumer Prices Index (CPI) rate fell sharply from 2.7% to 2.2% the month before and economists on average expect it to remain the same when the figure is announced by the Office for National Statistics (ONS).

Another drop closer to the target measure should ease pressure on the Bank, whose remit is to bring inflation down to 2%.

The Bank's interest rate setters have had to loosen their focus on inflation, maintaining ultra-low borrowing rates to help nurse the economy back to health, but p ressure to tighten monetary policy would increase if inflation were to look like rising.

October's 2.2% rate was the lowest level in more than a year, equalling the rate seen in September 2012. It was last lower, at 1.9%, in November 2009.

Any fall in inflation should provide at least a crumb of comfort to squeezed households where wage growth continues to lag behind the rise in the cost of living.

Scotiabank's Alan Clarke expects a slight fall to 2.1%, with energy price hikes yet to show an effect, though a fall in petrol prices may have a marginally upward effect as it is less than the drop seen this time last year.

Howard Archer, of IHS Global Insight, said indications from the retail sector showed food prices may have edged lower in November, though discounting by non-food shops may have been less than in 2012. He predicted the rate remaining at 2.2%.

Mr Archer said inflation should hover around 2-2.5% over the coming months with little pressure from squeezed consumers to push prices up.

Investec's Philip Shaw, on the other hand, expects the downward pressure from food and energy bills not yet taking effect to see CPI fall to its 2% target for the first time in four years.