Nicholas Hyett, Investment Analyst, Wealth Club “Is inflation still problematically high or is it now coming under control? You could argue for either, or even both, a sign of the confused picture for inflation at present. It won’t make life easier for the policymakers, and raises questions around the future course of interest rates in particular. When it comes to interest rates, the financial world divides into the hawks and the doves – those who think rates will rise and those who think rates will fall. Sentiment has swung wildly between the two over the last six months, and since inflation is the key factor determining interest rate movements these numbers will have been closely watched by both sides. Unfortunately, there’s little in here to calm confusion in the financial aviary.
For those who think inflation is on a lasting downward trend, and therefore expecting interest rate rises to slow and perhaps reverse later in the year, there’s a welcome fall in headline inflation. That’s driven by movements in transport costs, largely down to lower…