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UK inflation: bumping around before a bounce

20th January 2021

Commenting on this morning’s inflation data, Melanie Baker, senior economist at Royal London Asset Management said: 

“Inflation has been bumpy around similar levels since the Summer and there isn’t much evidence of headline inflation trending anywhere yet.

“For now, the summer’s temporary VAT cut will still be weighing on core and headline inflation. But VAT is set to rise again on April 1st. Headline inflation will also get a mechanical boost from positive energy price base effects.

“Problems at the border and global supply chain issues that seem to be pushing up shipping costs, may also play a role.”

-ENDS-