Today’s announcement by the ONS that a data error meant CPI inflation in April should have been 3.4% rather than the published rate of 3.5% means that inflation was broadly in line with the Bank of England’s forecast after all rather than stronger than it. April’s figure won’t be revised, but the correct data will be used from May’s CPI inflation release. As a result, we have revised down our forecasts for CPI inflation by 0.1 percentage point. We now think inflation will fall back to 3.1% in May before temporarily rising to a peak of 3.6% in September (3.7% previously).
This is the latest in a series of errors, delays and suspensions that have undermined confidence in the economic data published by the ONS. Because of this, we are resending our analysis of the quality of the UK’s economic data, which highlights how low-quality economic data can lead to inefficient policy choices.
We'll be discussing the outlook for UK fiscal policy and issues relating to the wider economy shortly after the Chancellor's Spending Review is released in a 20-minute online Drop-In at 3pm BST on Wednesday 11th June. (Register here.)
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