CBI responds to latest inflation figures

Alpesh Paleja, CBI Lead Economist, said:

“February’s uptick in inflation proved to be short-lived, with the CPI rate having fallen back in March. Inflation should continue to fall over the rest of this year, thanks to lower energy prices and base effects unwinding. But with the CPI rate set to stay above the Bank of England’s target, this will still be a tough year for many households – in particular, the strength in food price inflation will continue to have a big impact on peoples’ pockets.

“Monetary policy is now facing a renewed trade-off, with the inflation outlook looking more benign against the backdrop of some resilience in economic activity. With domestic price pressures still stubbornly strong, it’s plausible that the Bank of England will raise interest rates again at its May meeting. Nonetheless, we’re likely close to the peak in this rate-tightening cycle.”