Inflation will remain above Bank of England’s target rate in a blow for households – London Business News | Londonlovesbusiness.com

The Office for Budget Responsibility (OBR) have warned that inflation will remain above the Bank of England’s target rate.

The OBR have increased their inflation target forecasts due to continued pressure on household finances, they announced on Wednesday.

The Chancellor told MPs in the House of Commons on Wednesday delivering her first Autumn Budget that the OBR have predicted the Consumer Prices Index (CPI) for inflation will be around 2.5% for 2024.

In March the OBR previously projected that inflation will be around 2.2% for the year. In September inflation fell to a three year low of 1.7% following a fall in petrol prices.

In August the Bank of England cut interest rates from a 16-year high of 5.25% to 5%, it is now unclear if Threadneedle Street will lower the base rate in November.

The OBR forecasts shows that inflation will now rise to 2.6% next year, there are predictions inflation will rise to 2.3% in 2026 and 2.1% in 2027 and 2028.

As I reported early this month, economists have said that the Bank of England is likely to cut interest rates as the wage growth has now hit its lowest level in four years.

According to money markets there is an 84% that the MPC will vote to cut the base rates to 4.75% from the current 5% next month, this is now in doubt.