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THE WEEK AHEAD

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UK producer input prices eased significantly last year. In December growth was down to 5.8% from a peak of 12.1% at...
UK producer input prices eased significantly last year. In December growth was down to 5.8% from a peak of 12.1% at the beginning of the year. Economists expect the downward trend to continue over the coming months, and the consensus is forecasting growth of 4.5% in January.

Output prices eased much more slowly last year as companies attempted to maintain margins. At the end of last year growth had fallen to 4.3%, only slightly lower than July's peak of 4.5%. Nevertheless, the underlying trend in factory gate inflation is clearly downwards and the consensus is expecting growth of 3.9% last month.

The Bank of England's Quarterly Inflation Report is published on Wednesday. It will be scrutinised for signs of any difference in opinion between the chancellor and governor about the most appropriate conduct of monetary policy. The bank is likely to highlight a number of upside risks to the inflation outlook, such as the recent acceleration in broad money growth.

There is expected to have been a significant reduction in the headline inflation rate last month, reflecting lower mortgage rates.
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