“February’s slowdown is a false dawn as notable near-term price rises are already baked in, with next month’s jump in energy bills and national insurance likely to push inflation perilously close to 4% sooner rather than later.
“Stubbornly high services inflation will aggravate fears that underlying price pressures in the economy have not yet been brought to heel, particularly given the likely upward momentum from April’s national living wage increase.
“The OBR’s expected uplift to their inflation forecast would be another Spring Statement headache for the Chancellor as while it may boost government revenue, it would also mean higher spending on debt interest, further shrinking her fiscal wiggle room.
“While a May policy loosening remains on the table, rate setters will want to gauge the effect of April’s major jump in business costs and any measures announced in the Spring Statement before proceeding with another rate cut.”
ENDS
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