UK Inflation: A Tiny Tumble
The latest numbers from the Office for National Statistics (ONS) dropped inflation from 2.6% in November to 2.5% in December. That sounds like a breath of fresh air for anyone tired of the monthly price rise shuffle.
Why the Bank of England Gives You a Happy Dance
It’s a rare moment of sunshine in the UK economy, and the Bank of England (BoE) is sipping its coffee in high spirits. The drop aligns with their forecasts, giving the green light for further rate cuts.
Services Inflation: A Whisper of Danger
The BoE is particularly appreciative that service prices didn’t jump. If the job market were a tightening ballet, any upbeat missteps would likely show up here. But for now, it’s a quiet performance.
Of course, keep an eye on what’s coming in April:
- The bump in employer National Insurance (NI)
- Minimum wage hikes that could ripple through the economy
- A predicted surge in energy price inflation
Looking Ahead: The BoE’s Crystal Ball
Even with the current dip, the BoE foresees inflation creeping up to roughly 2.75% by the second half of 2025. Still, they were daring enough to slash rates in November.
Future Rate Cuts: Easy Peasy? Not So Much
With monetary growth on a down trend, economic activity slowed, and the labor market taking a nosedive, the BoE is likely to shave off more rates starting in February and rolling through the year.
Budget Impact: Cheap Optimization
While the Office for Budget Responsibility (OBR) had already tucked additional cuts into the October Budget forecast — and that keeps the public finances relatively calm — every extra slash in rates amps up confidence in both the economy and the markets. In our current mood, that’s basically the big win.
Stay in the Loop
Want the latest updates shipped straight to your device? Subscribe now! Down below, you’ll find the handy subscription link to keep you in the know.
