Inflation could rise in January 2024 despite the Consumer Price Index (CPI) rate easing in recent months, experts warn.
Experts are sounding the alarm that “households are still feeling the pinch” and further inflation rises are not out the question.
For the 12 months to November 2023, CPI inflation eased to 3.9 per cent after peaking at 11.1 per cent last year.
This suggests the Bank of England’s series of interest rate hikes over the past year have been effective in addressing the issue of inflation.
Inflation could rise in January, according to experts
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However, the Resolution Foundation reports that it will be hard for similar falls in inflation to take place next year.
According to the think tank, while inflation will likely drop further in 2024, the CPI rate could jump slightly in January.
As it stands, the Bank of England is forecasting that inflation will not fall below three per cent until January 2025.
This will likely be after the next General Election and is still higher than the central bank’s desired two per cent target.
In reaction to last month’s figures, Prime Minister Rishi Sunak wrote on social media: “A year ago inflation was at 11.1 per cent.
“Today, it’s down to 3.9 per cent. This is good news for everyone in this country.”
Lalitha Try, an economist at the Resolution Foundation, suggested these statements are “premature” at this juncture.
She said: “A sharp fall in inflation in November marks a welcome end to a year to disappointing economic data.
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Inflation eased to 3.9 per cent last month
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“Having started the year with double digit inflation, families will be relieved to see inflation falling below four per cent, with food and fuel cost pressures all coming down.
“However, the sheer scale and duration of the cost-of-living crisis means that any declarations of victory in the battle to tame inflation are premature. Households are still feeling the pinch.”
On top of inflation, households have been forced to contend with high interest rates over the past year, although experts are predicting a cut to the base rate in 2024.
The next CPI inflation announcement for the 12 months to December 2023 from the Office for National Statistics (ONS) will take place on January 17, 2024.