From Morningstar:

The UK inflation figures for January 2024 are expected to show an annual rise of 4% for the Consumer Price Index (CPI). December data showed a surprise increase to 4%, causing concern in the stock market and possibly delaying interest rate cuts. The Bank of England has projected inflation to fall back towards the 2% target by 2026.

The current inflation drivers in the UK are alcohol, tobacco, and higher energy bills following a cold snap in January, alongside increased oil prices due to geopolitical events. In January, Bank of England governor Andrew Bailey predicted that inflation would decrease in spring, but then rise back to 2.75% towards the end of the year, not hitting target until 2026.

Reports suggest the Bank of England may cut rates soon, with expectations for a rate cut in June, although the Bank is concerned about the persistence of inflation. While global inflation trends are similar, recent news from the US and European Central Bank indicate that monetary easing might not be imminent, with rate cut expectations being pushed back to May and no signals yet from the ECB about when rates might fall.



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