The Bank of England says inflation could fall to around 5% by Christmas - how reliable is that?
The Bank of England's forecasting, which informs major decisions for the UK economy, is being reviewed and has been criticised.
The UK's central bank is independent of government and it uses interest rates as a tool to try to keep inflation at a steady level.Higher interest rates make it more expensive to borrow, with the economic theory being that we will end up spending less, and then prices will not rise as fast. On Thursday, the BankEvery three months, the Bank's officials set out what they think might happen over the next year or two to jobs, the economy overall and to the prices we pay.
The red line shows what inflation was each quarter over the past few years, while the grey line shows what the Bank had predicted for the same periods.As you can see, inflation turned out to be higher than the Bank forecast much more often than not.they have got some judgements wrong in their forecasting.But officials point to the huge shocks we've been living through in recent years.
But it's much harder to work out exactly how those energy prices will feed through farmers, importers, lorry drivers and supermarket prices, or discounts and your shopping choices.
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