Monthly Economic Review – April 2017
(Based on March 2017 data releases)
- BCC upgrades its UK economic growth forecast for 2017, but downgrades outlook for 2018.
- Inflation breaches the Bank of England's 2% target as earnings growth continues to slow.
- Federal Reserve raises US interest rates and more rises are expected this year.
The third official estimate for Q4 2016 UK economic growth (GDP) stood at 0.7%, which was unrevised from the previous estimate. Household disposable income fell by 0.4%, however consumer spending continues to be a key driver for UK growth.
CPI inflation in the UK stood at 2.3% in February 2017 – up from 1.8% in January. This is the first time since November 2013 that inflation has been above the Bank of England’s 2% inflation target.
The Federal Reserve has increased US interest rates by 0.25 percentage points to a target range of between 0.75% and 1%. This is the second time in three months that the US central bank has raised rates. If the US monetary policy continues to tighten, this will increase the downward pressure on sterling, which is likely to push UK inflation higher.