UK inflation falls to lowest level since early 2021
Manage episode 462301130 series 3640585
The UK economy faced mixed signals this week as inflation slowed unexpectedly in December, dropping to 2.5%, the lowest since early 2021, driven by lower energy and food costs. This has heightened expectations for Bank of England (“BoE”) rate cuts, with the market pricing in three reductions this year. However, core inflation remained stable, and economic growth is stagnating, raising concerns about stagflation. Business confidence plunged to a two-year low amid higher taxes and weak demand, while large firms plan hiring cuts and scaled-back investments following the Chancellor’s £25 billion social security charge hike. UK trade growth prospects remain subdued, with Boston Consulting Group projecting just 0.7% annual growth until 2033, hindered by Brexit and global supply chain shifts. Retailers, facing rising taxes and wages, are hiking prices, adding to consumer pressures...
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