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Raising interest rates would be a misstep following surprise inflation fall, ICAEW says

Author: ICAEW

Published: 20 Sep 2023

Suren Thiru, Economics Director at ICAEW, responded to the UK inflation figures for August 2023, released by the Office for National Statistics today (Wednesday 20 September 2023):

“This surprising drop in inflation suggests that the UK is winning the battle against soaring prices.

“Inflation’s current downward trajectory should gather momentum over the Autumn as falling energy bills, a weakening economy and the lagged impact of interest rate rises pushes the headline rate noticeably lower.

“The notable decline in services and core inflation suggests that underlying price pressures are becoming less sticky. The downward pressure from a cooling jobs market and a deteriorating economic outlook should continue to keep them on a downward path.

“Although interest rates will probably rise on Thursday, additional tightening unnecessarily risks aggravating the financial struggles facing households and businesses, given the long time-lag between rate hikes and their impact on the real economy.”


Notes to editors:

Contact: ICAEW media office media.office@icaew.com, tom.mackintosh@icaew.com or 07866 853 841