Capital Economics has also said that public sector pay deals could cause an 'upside' risk to inflation
Capital Economics has also said that public sector pay deals could cause an"upside" risk to inflation
Capital Economics had previously suggested that a rebound in inflation later this year would not be as large as some other forecasters had predicted.It has also said there is a “big risk” that pay deals in the public sector “set a benchmark for private sector firms, keeping wage and services inflation elevated.”
Inflation currently sits at 2.2 per cent, after the consumer prices index measure remained at 2 per cent for two months between May and June. The higher inflation figure could mean the Bank of England cuts interest rates more slowly than expected, as it tends to do so when inflation returns to target.
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