“Despite a December rise, inflation is expected to continue falling this year” says Yael Selfin, Chief Economist at KPMG UK.
"The expected fall in the energy price cap in April could see inflation returning to target by spring. Nevertheless, disruptions in the Red Sea impacting supply chains could cause further increases in goods prices adding uncertainty to the economic outlook.
“The anticipated overall improvement in the outlook for inflation, coupled with the slowdown in the domestic economy, will likely put the Bank of England in a position to begin cutting interest rates from the second half of the year, potentially lowering rates by 100 basis points in 2024.
“December’s inflation rose slightly to 4%, driven by higher tobacco duties and persistence in services inflation. Encouragingly however, food price increases continued to moderate with further slowdowns likely to lower headline inflation this year.”
