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Inflation and Monetary Policy

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  • National Institute of Economic and Social Research

Abstract

Inflation was 3.4 per cent in the fourth quarter of last year, lower than the 3.6 per cent rate we were expecting in August. CPI inflation is projected to remain above 3 per cent until April 2026, when the impact of the significant price increases in April 2025 will drop out of the calculation. In addition, the changes to energy bills announced in the November budget are likely to reduce inflation further. We now expect inflation in April 2026 to be slightly below the Bank of England’s target of two per cent and to settle around its target thereafter (figure 11).

Suggested Citation

  • National Institute of Economic and Social Research, 2026. "Inflation and Monetary Policy," National Institute Economic Outlook, National Institute of Economic and Social Research, issue Winter, pages 29-32.
    • Handle: RePEc:nsr:niesre:i:winteryy:2026p:29-32
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    File URL: https://niesr.ac.uk/wp-content/uploads/2026/02/UK-Economic-Outlook-Winter-2026.pdf?ver=EyxXRRh0JbNxFNGn7b3d
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