Kames Capital – UK inflation ‘may have peaked already’
The Office for National Statistics this week revealed that inflation has dropped 3% for December, down from its recent its recent high of 3.1%. Below James Lynch, Investment Manager at Kames Capital, gives his views on what to expect from inflation this year.
“The main measure of UK inflation, CPI fell slightly from 3.1% to 3% for December, while RPI (a discredited statistic of a not-insignificant importance for pension liabilities) increased from 3.9% to 4.1%” he said.
“The story for 2018 in inflation will be how much of the strength in the pound we have seen since Spring 2017 and the base effects will lower UK inflation in the coming months. CPI was in line with what most economists were forecasting but the core measure (ex-energy, food, alcohol & tobacco) was lower, falling from 2.7% to 2.5%. The core is generally seen as more “domestic pressure”, and with this measure slightly dampened – and the prospect of the sterling effects coming through – it is possible we have already seen peak UK inflation this year.”