15 Dec 2023

It is increasingly obvious that price pressures in the UK have simply lagged their international counterparts in this cycle, and are likely to fade at a relatively comparable pace in the early new year. All-items inflation rose just 3.9 percent in the year to November, the slowest pace since September 2021, and core – which has trailed headline inflation in all major developed economies, fell to 5.1 percent from 5.7 in the prior month – led by a slowdown in services growth. Consumer Price Indices, annual % change

Speaking in Capetown this August, Bank of England Chief Economist Huw Pill suggested that the central bank’s policy path could resemble the broad and flat “Table Mountain” which looms over the southern tip of Africa. Under this scenario, he argued, rates wouldn’t need to climb a lot higher, but might have to remain at elevated levels for a prolonged period to bring inflation risks down. Thus far, his colleagues have signalled agreement. In contrast with their counterparts at the Federal Reserve – who have acknowledged they could begin cutting in the early new year – British officials have maintained a...