Inflation set to plummet below 5% but economic growth 'slowing'

INFLATION is tipped to fall to 4.6% by the end of the year but the Bank of England said economic growth is stalling and is unlikely to rally for more than 12 months.

- Martyn Brown

It held interest rates at 5.25% yesterday, announcing the surprise drop in inflation at the same time.

It means Prime Minister Rishi Sunak is likely to fulfil a pledge to halve inflation by the end of this year to around 5.4%. It stood at 6.7% in September. The Bank expects the rate will fall further next year, as energy and food price rises ease.

But its forecasts show it will stay above its 2% target until next autumn. And while the economy has been growing, the trajectory was less certain in 2024. It is not predicting recession but expects zero growth from now, next year and into 2025.