'More questions than answers' as inflation remains unchanged at 4%

investmentweek.co.uk:

'Headline CPI inflation is running slightly below the BoE’s forecasts over the last few quarters.'

Mazars chief economist George Lagarias highlighted the monthly figure, which showed inflation fell 0.6% from December, the largest drop in a year.

«Quite frankly, I see no reason to be pessimistic about UK inflation,» he said. «If the pace is maintained, in the next four months, we will see much better headline numbers, as we put the high inflation figures from February to May 2023 behind us.»

UK wage growth defies forecasts but slows to lowest level in more than a year

Daniel Casali, chief investment strategist at Evelyn Partners, added the figure was «benign» and suggested the «broad downward trend in inflation is continuing».

«We see disinflationary pressures driving the rate down towards the Bank of England's forecast of around 3% in Q4 of this year,» he argued. «Importantly, headline CPI inflation is running slightly below the BoE's forecasts over the last few quarters.»

While Neil Birrell, CIO at Premier Miton Investors, agreed the figure was «a little better than expected» and likely to be taken as «good news by those looking for rate cuts sooner rather than later», he warned the Bank of England is «still unlikely to be driven into any decisions that will risk the journey back towards target being jeopardised».

Investment director of liquidity at Canada Life Asset Management Steve Matthews agreed, noting the lower-than-expected CPI figure was accompanied by «stubborn wage data…higher global energy prices and the ongoing developments in the Red Sea», which means today's release supports the BoE's «England's cautious stance on cutting rates any time soon».

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