If you are covering the latest UK inflation figures, please see he following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
"Comparative to last year, there has recently been a sense of cautious optimism in the air and this morning’s inflation figure of 3.9% adds to this. The Bank of England now certainly faces a less daunting task in steering inflation back to its 2% target next year, without necessitating a deep recession."
"Despite today’s drop, the broader economic picture remains complex, marred by stagnation and subdued growth prospects."
"The year 2023 has been marked by economic inertia, a narrative underscored by the recent Office for National Statistics report, revealing a 0.3% contraction in GDP between September and October. This stagnation, leaving the output no higher than it was in January, paints a picture of an economy struggling to rebound from a series of unprecedented challenges."
"Despite these challenges, this further decline in the pace at which prices are rising offers a glimmer of relief for households grappling with rising living costs. Yet it has not translated into robust economic activity. Key sectors like IT, financial services and retail have seen a dip in output since the start of the year, indicating an economy that is yet to find its footing."
"The pressures are manifold – from the cost of living crisis, volatile energy markets, Brexit aftershocks, to enduring productivity issues. These factors have collectively dampened economic prospects and consumer confidence. Households continue to struggle with soaring food prices and wages, adjusted for inflation, barely keeping pace. However, positively notably transport, and recreation and culture prices have reduced easing inflation."
"The rental and mortgage markets are another area of concern, with record-high rental growth and although mortgage rates are softening they have piled additional financial strain on households."
"While the UK's economic performance mirrors the broader European trend, it starkly contrasts with the resilience shown by the US economy. Looking ahead, forecasts for 2024 remain muted, with the Bank of England projecting a continuation of this stagnant growth phase."
"But while things have been bleak for some time, signs of recovery are emerging, with wages finally outpacing inflation and consumer confidence showing early signs of recovery and this morning’s relatively sizable drop in inflation. This modest rebound, in light of the myriad challenges faced this year, suggests a resilience in the UK economy that shouldn't be underestimated. While the economy may not have achieved the growth anticipated, its ability to avoid a deep recession amidst such turbulent times is noteworthy but whether this can continue into next year is yet to be seen."
