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23rd May 2022 18:00U.K., Daily Monitor

CPI inflation likely would hit the 2% target by April 2023, if energy prices instantly return to early January levels.

Past experience suggests a temporary 2.5pp VAT cut would lower CPI inflation by only 0.3-to-0.6pp.

A 10% depreciation of sterling would boost the CPI by 0.75pp after one year, and by 2.75pp in the long term.

core cpi cpi cpi inflation current account deficit depreciation electricity electricity prices energy energy prices exports futures prices headline rate January July labour mpc natural gas October Ofgem oil oil prices restaurants September sterling vat vat cut

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Keywords for: Considering Energy, VAT and Sterling Scenarios for CPI Inflation

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