Inflation Outlook: 2014
Over the last few years, economists have been firmly divided into two camps; are we facing a period of deflation, or will inflation take off again?
Looking back to March 2009, as Quantitative Easing began (QE), most City analysts were concerned about deflation and the dangers of falling prices were cited as justification for QE (expanding the UK’s monetary base).
By late 2011, prices were rising with CPI at 5.2%, matching the record high set in September 2008. RPI rose to 5.6%, the highest annual rate since June 1991.
Since then, both measures have fallen back again, with CPI now below the Bank of England’s 2% target rate for the first time since November 2009.