Inflation to fall fast in 2024 helping UK economy to ‘turn a page’, PwC predicts
Inflation will fall much faster than the Bank of England currently expects, new forecasts from PwC suggest, helping the UK economy to “turn a page” in 2024.
In its economic outlook for next year, the Big Four firm predicted that inflation will “come close” to hitting the Bank of England’s two per cent target in 2024.
Although PwC warned there could be an “uptick in inflationary pressure” in the first quarter of next year, large falls in global energy prices will help bring the headline figure towards the target.
The Bank of England meanwhile expects inflation to be stuck above three per cent at the end of 2024, as a tight labour market fuels wage higher wage growth.
Recent figures have suggested that the Bank’s forecasts might be too pessimistic. Inflation fell to 3.9 per cent in November, its lowest level in two years.
With inflation falling, PwC predicted consumer sentiment will pick up in the new year. “For the first time since 2021, more households will expect to be better off in twelve months time than worse off,” the firm said.
Thanks to stronger consumer spending, the UK is expected to outperform both France and Germany next year.
Barret Kupelian, chief economist at PwC said 2024 will be “the year the UK turns a page”.
“Inflation returning closer to normal levels, progress on regional growth and real incomes improving provides optimism for the year ahead, despite the legacy of higher consumer prices and rising housing costs,” he commented.
The forecasts come a week after revised figures for the third quarter put the UK on the brink of a technical recession, defined as two consecutive quarters of negative growth.
According to the Office for National Statistics, output contracted 0.1 per cent in the three months to September while GDP also contracted in October.