Deflation risks may be on the horizon

Big falls in the Ofgem utility price cap in April and July could mean that CPI inflation falls from 4.0% in December 2023 to just 0.3% by September. If the chances of inflation hovering only a bit above 0% towards the end of this year grows, the Bank of England’s focus may shift from worrying about inflation being too persistent to fearing deflation.

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