Annual inflation in the UK is expected to fall below 2% for the first time since April 2021, according to data anticipated to be released next Wednesday.
Official figures are predicted to show a decline in consumer price inflation (CPI) from 2.2% in August to between 1.8% and 1.9% in September, marking the first time inflation has dipped below the Bank of England’s 2% target in more than three years.
The expected drop in inflation comes as a result of falling global energy prices, the resolution of supply chain issues following the pandemic, and the impact of aggressive interest rate hikes. Annual inflation has been steadily declining since peaking at 11.1% in October 2022.
Economists suggest the September inflation figure may be even lower than the Bank of England’s forecast of 2.1%, driven by a sharp reduction in energy and oil prices last month. Analysts at Barclays suggest inflation could fall to 1.7%, while Deutsche Bank points to broader energy price deflation and dips in food, tobacco, and services costs pushing inflation down to 1.8%.
Sanjay Raja, chief UK economist at Deutsche Bank, said, “After headline CPI moved sideways in August, we expect inflation to drop to a new cyclical low in September.”
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