Inflation set to rise 4 times to 4% in 2017
NIESR (National Institute for Economic and Social Research), founded in 1938 making it the oldest independent economic research body, predict a rise of inflation to 4% in autumn 2017. They say the rise will rapidly accelerate during 2017 caused by the drop in the value of the pound.
This rate was originally estimated to be 3% back in august but since has been reassessed and raised to 4%
The economy could also face restricted growth as it faces some “significant risks”. CPI (Consumer Price Index) in September rose from 0.6% to 1% according to ONS (Office for National Statistics) Petrol, clothes and even hotel room prices rose as this figure hit its highest point in nearly two years.
In a quarterly Inflation Report due on Thursday The Bank of England is expected to raise its predictions for inflation
As we all know, since the Brexit vote the pound has fallen dramatically and NIESR expected it to remain at about $1.22 and €1.11 both this year and 2017
“the fall in sterling had been the most striking feature of the economic landscape since the EU referendum.” Said the head of macroeconomic modelling and forecasting at NIESR, Simon Kirby
“This will pass through into consumer prices over the coming months and quarters,” he said. “While we expect this to be only a temporary phenomenon, it will nonetheless weigh on the purchasing power of consumers over the next couple of years.”
CPI has fallen steadily over the last 5 years after hitting 4% back in 2011
“NIESR is right to warn that households are about to endure a renewed period of falling living standards due to soaring inflation.” Said chief UK economist at Pantheon Macroeconomics, Samuel Tombs
“Fuel, food and technology prices already are rising in response to the weaker pound, and hefty price rises will be seen across the whole spectrum of consumer goods next year.”