A Framework That Provides Clarity

During periods of “low visibility,” confusion reigns: for every indication of one trend, there seems to be a countertrend. The key is to glean from the collective wisdom of reliable leading indicators a clear signal that the economy is headed for a turn.

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Jan 09 2014

As U.K. Inflation Nears BoE Target, Upward Pressures Emerge

ECRI has just updated its United Kingdom Future Inflation Gauge (UKFIG). The value of this forward-looking gauge lies in its ability to predict cyclical turns in U.K. inflation.

In November, the U.K. inflation rate fell to a four-year low of 2.1%, approaching the Bank of England’s (BoE) 2% target last achieved in late 2009. However, with several major energy producers instituting price increases in December, the inflation rate faces upward pressure. Also, the consensus expects further pressure from home price growth as the strengthening recovery and the Help to Buy program, designed to boost loans, continue stoking home demand.

The latest update to the UKFIG clarifies the future trajectory of U.K. inflation, indicating whether it will continue its slide back to the BoE’s target, or will once again reverse course.

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