CEBR: Inflation to peak then fall

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CEBR: Inflation to peak then fall

Thu 16th Oct 2008

The rate of inflation is likely to peak next month before falling rapidly, it has been claimed.

Ben Read, managing economist at the Centre for Economics and Business Research (CEBR), said that if inflation has not peaked now it may do so next month.

But he added: "It is going to come down pretty sharply either way."

Mr Read noted that commodity prices have dropped already, adding that the oil price bubble was fuelled largely by speculation.

Oil prices are falling as demand slows, with commodity prices following suit, he explained.

Mr Read said that he believed the key issue is whether or not inflation will be beneath target next year.

According to his analysis, it could fall to less than two per cent.

"Possibly this time next year the Bank of England will be worrying about undershooting its target rather than overshooting it," he stated.

Consumer inflation hit 5.2 per cent in September, according to data from the Office for National Statistics.

Housing and household services comprised the greatest upward pressure, due to gas and electricity price hikes.

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