‘Picture could change’ before BoE’s next rate call

Proactive Investors – January’s slightly lower-than-expected inflation provides “a little bit to love” for the Bank of England in determining when base , analysts say.

Prices grew by 4% in January, the ONS revealed on Wednesday, in line with and below market expectations of a 4.2% jump.

Though the figure remains double the Bank of England’s 2% target, Charles Stanley chief analyst Rob Morgan said there were many positives to take from Wednesday’s reading.

Higher energy and airfare costs fuelled the jump, Morgan noted, adding such inflated prices could be temporary.

The data also revealed a fall in food prices, the first decline since 2021, alongside weakness in consumer good prices, Morgan pointed out.

“Interest rate cuts are on their way as the inflation trend is looking favourable,” he commented.

That said, service inflation continues to remain on the “sticky side”, driven in part by wage increases, according to Morgan.

“Overall, there is currently insufficient evidence of a concerted economic weakening that might make the Bank (of England) think about cutting at the next meeting of the monetary policy committee on 21 March,” he added.

“There will be another batch of inflation and other economic data before then, though, so the picture could change.”

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