Inflation likely to average 8%
by Bernard Harbor
 
The bleak assessment in the institute’s Summer Economic Report is that real incomes will fall for most households this year, and that wages are unlikely to keep pace with inflation.
The bleak assessment in the institute’s Summer Economic Report is that real incomes will fall for most households this year, and that wages are unlikely to keep pace with inflation.

Inflation is likely to average close to 8% over the whole of 2023 before falling gradually to around 4% by the middle of next year. That’s the latest view from the trade union-backed Nevin Economic Research Institute (NERI).

 

The bleak assessment in the institute’s Summer Economic Report is that real incomes will fall for most households this year, and that wages are unlikely to keep pace with inflation.

 

And there’s a risk that the fall in real incomes will cause a decline in economic activity unless people start spending their savings, which looks unlikely given the current financial uncertainties. This means a short recession is possible, though NERI says it wouldn’t be anything like on the scale experienced following the 2009 crash or the recent pandemic.

 

The report says that both the public finances and employment growth remain strong, with youth unemployment at an all-time low. This points to a likely economic bounce-back in 2023, with the caveat that events in Ukraine and broader global economic and political uncertainties could bring unforeseen setbacks.

 

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