04 May 2022
Since the pandemic, inflation has risen further and for longer than most market participants expected in many countries including the UK. Strong demand, ongoing supply chain constraints, rampant energy and commodity price inflation continue to push prices higher. How high will inflation go, and will it persist? Has the era of respectable growth rates and low inflation finally come to an end?
We have introduced “InflationWatch” to help clients assess the outlook for inflation, and we plan to publish it quarterly. This paper provides:
- An update on the latest position on inflation.
- Consensus forecasts on future inflation rates.
- Our view on whether the risks to the consensus view are tilted to the upside or downside.
We focus on the UK and the outlook over the next 2-3 years. Our primary measure of inflation is the change, year-on-year, in the headline Consumer Price Index (“CPI”). Inflation in a modern, open economy is determined by a complex set of macroeconomic factors including aggregate demand, input costs, inflation expectations and monetary policy stance. Further details of the indicators we use to track each factor are provided in the appendix.
Download our publication now to find out more.