UK Inflation, October 2016 - PwC comments
Published at 10:13 AM on 18 October 2016
Commenting on the latest inflation figures, Andrew Sentance, senior economic adviser at PwC, said:
“Inflation has risen to 1.0 percent this month, as expected. Higher import prices are feeding through to consumers because of the fall in sterling since the EU referendum vote. This latest rise, however, is just the tip of the inflationary iceberg which is coming our way. Since the beginning of September, sterling has fallen a further 8 percent or so against the euro and the dollar. This will continue to push up inflation in the months ahead. A stronger oil price will add further to price rises for energy and transport.
“Over the course of next year, we should expect inflation to rise above the Bank of England's 2 percent target. This will squeeze household spending power and add to the slowdown in the economy in 2017. PwC is forecasting a slowdown in growth to around 1% next year, with investment cutbacks reinforcing the slowdown in consumer spending.”
The inflation figures came on the same day that PwC’s latest Global Economy Watch confirmed UK households aren’t feeling the effects of the recovery.
The PwC report said that, while UK GDP in Q2 2016 was up by 7.6% since Q1 2008, real household spending per person declined by 0.9% over the same period.
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