Oh dear. About this time last year, as part of its series of predications about how the sky would fall in after the Brexit vote, the NIESR predicted that inflation would hit 4 per cent. This was way out of line with the the consensus, higher than other economist was forecasting. But in the rather febrile atmosphere its nonsense forecast was given plenty of coverage – including a page lead in (yes, you guessed it) the Financial Times. It turns out that inflation has peaked at 3 per cent, and is widely expected to fall.
Since the NIESR has been congratulating itself recently on the accuracy of its forecasts, it’s worth reminding ourselves what it has to say about inflation.
‘We expect CPI inflation to accelerate rapidly,’ said the NIESR, ‘reaching about 4 per cent in late 2017 and only returning to the Bank of England’s 2 per cent target in 2020.’
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