Uk Inflation Falls In February Yougov

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Uk Inflation Falls In February Yougov

UK Public's Expectations For Inflation Falls In February - Yougov

According to YouGov's survey, the inflation expectations for the year ahead have gone down during February. This survey was also reaffirmed by the Citi (US Bank), which has also lowered its inflation forecasts.

According to Citi, the inflation during the next 12 months will be near 3.6%. Earlier, the forecast was near 3.9% during January which suggests that the inflation situation is showing improvement.

Inflation Forecast For 5 - 10 Years At 3.5%

As for the inflation forecast in the 5 - 10 years, the reading has gone down from 3.6% to around 3.5% only. The analysts at Citi added that despite the public's expectations, the long-term data hints at lingering risks.

Despite these risks over the long term, the inflation in the UK will likely drop to 2% during Q2 2024. The Citi experts also added that there's no imminent danger in terms of inflation for the UK economy.

As for the BoE policymakers, Citi added that the economic data shows that there is a chance of large cost shocks. However, the bigger picture shows that the chance of low inflation is still very high.

That's why Citi experts have adopted a more balanced view when it comes to looking at the economic risks faced by the UK. Even if these risks materialize, it will only be in the middle of the year 2024.

So, if we take Citi's forecast as true, it means we are on the path towards the first rate cut of 2024 by BoE. However, inflation is such an indicator that it can't be taken lightly at all. After all, we have already seen how inflation can result in upside surprises which even takes the Bank of England by surprise.

Given all of this, it would be wise to adopt a wait-and-see approach when it comes to inflation in the UK. However, a drop under 2% will confirm that the time for rate cuts has come.

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