Cheaper petrol prices have helped push the rate of inflation to its lowest level in nine months, figures this week will show.
The Consumer Price Index is expected to have fallen to just below 10 per cent in March.
But traders are pencilling in a new interest rate rise in May, fearing inflation will stay higher for longer. They note that prices are still rising twice as fast as in the US.
Down: Cheaper petrol prices have helped push the rate of inflation to its lowest level in nine months
Treasury officials are more hopeful, saying that inflation could halve to 5 per cent in the summer as the spike in fuel and food prices caused by the invasion of Ukraine eases.
That should also dampen wage demands, especially in the public sector, which will be a relief for Chancellor Jeremy Hunt.
Economists say the level of unfilled job vacancies – a driver of persistent inflation – is also at a turning point, with a small rise in the unemployed rate expected this week.
‘The UK’s red hot labour market appears to be cooling,’ said Philip Shaw at Investec bank, ‘a slowdown that the Bank of England believes necessary to reduce inflation.’
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