KPMG comments on today’s inflation figures - February 2022
“Despite a January reprieve, inflation to hit households hard” says Yael Selfin, Chief Economist at KPMG UK.
“Despite a January reprieve, inflation to hit households hard”
“Despite the slight ease in inflation in January, we expect it to accelerate to 7.5% in April as the impact of the increase in energy tariffs takes effect, with low-income households facing the biggest proportional increase in costs. Inflation rose to 5.5%, a nearly 30-year high, as prices fell by 0.1% in January.
“The combination of policy action and slowing price rises should see the headline rate of inflation return to 2% by the end of next year. However, forecasts are clouded by an unusual level of uncertainty, with risks to both the upside and the downside. Stronger wage pressures could see inflation become more persistent, while a faster resolution of supply chain problems could see the prices of heavily affected items, such as used cars, fall more quickly.
“The Bank of England has signalled a determination to get ahead of the curve on inflation, with another interest rate rise earlier this month and potentially at least two more rate rises later this year. In the short run, this will add to the squeeze on incomes as lenders pass on the rate increase to borrowers.”
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