Andrew Sentance, Senior Adviser - Cambridge Econometrics and former MPC member
Across most of the world economy, inflation has been the main economic problem for policy-makers, the public and businesses for nearly two years now. In the UK, for example, the current surge in inflation started in the summer of 2021 and has continued since then. The rate of UK CPI inflation was still over 10 percent in March 2023.
However, recent data from the US and the euro area has raised hopes that this surge in inflation is now abating. In the US, headline inflation dropped to 5 percent in March – down from a peak of 9 percent last summer. Euro area inflation has dropped from a peak of over 10 percent last autumn to 6.9 percent in March.
This has fuelled optimism that inflation could continue to fall rapidly in many countries in the remainder of this year, In the US, inflation is expected to fall to around 4 percent in the next few months. In the UK, it is ex...