One upside risk to inflation is that the Conservatives try to plug some of the hole in the public finances by raising taxes on goods and services in the CPI basket. But given that they have ruled out a VAT hike, this effect shouldn’t be too large. In any case, the fiscal squeeze will put some offsetting downward pressure on inflation by dampening demand.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services