Inflation is on track to fall below the Bank of England’s target as soon as April, a senior economist predicted, and Andrew Bailey, the bank’s governor, said the economy entered the new year in better shape than expected.
Sanjay Raja, chief economist at Deutsche Bank, said the “significant reduction in energy bills” is set to pull inflation below the bank’s 2 percent target from its current level of 3.9 percent and from a peak of 11.1 percent in October 2022. .
However, in a note to clients, Raja warned that “the trend is up [inflation] Risks remain, especially with regard to service inflation. With wage growth remaining highly uncertain, especially with the minimum wage rising historically significantly from April, service inflation may be a possibility.