NIESR: Head of UK macroeconomic forecasting Amit Kara reacts to the latest ONS CPI inflation data
NIESR’s Head of UK macroeconomic forecasting, Amit Kara said: “CPI inflation was 2.9 per cent over the 12 month period to May, broadly consistent with our forecast published in the May Economic Review.
We expect inflation to rise further over the course of this year and to reach a peak in the final quarter of 2017. This spike in inflation will exert further downward pressure on real household disposable income, at a time when wage growth remains modest, and in turn squeeze consumer spending.”
He added: “Although inflation has surprised the Bank of England on the upside, we expect the MPC to look through this temporary spike in inflation and hold monetary policy stable until mid-2019.”.
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Related information: Consumer price inflation
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