It is increasingly broadly based and our central forecast is that it won’t peak until the end of the year. After that we expect rising interest rates and cost-of-living pressures to drive a moderation in consumption that brings demand more in line with supply. This should help to get inflation back down to our target over the next couple of years.
But forecasting is inherently difficult, particularly when there are so many unusual forces bearing on the outlook. There are many uncertainties about the behaviour of households and businesses as well as the potential for unforeseen shocks. This is why it is important that we are continually reviewing the incoming data and testing the forecasts.