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”
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Anil Panchal
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Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
