Probability of low inflation in 2016 on the rise

The WBS website uses cookies. By continuing to browse this site, we will assume that you consent to the use of cookies in line with our cookie policy. 75 per cent chance inflation will be less than one per cent in 2016 One-in-three chance UK will suffer deflation next year Robust growth is forecast for 2015 and 2016 Growth between two and three per cent expected for 2015 The probability that UK inflation will stay at low levels through 2016 has increased after the second estimate for GDP growth released by the Office for National Statistics (ONS) was added to the macroeconomic data published in the last three months, according to the Warwick Business Forecasting System (WBSFS) . WBSFS continues to forecast robust economic growth for 2015 and 2016 but also estimates a three-in-four chance of inflation being less than one per cent in 2016, higher than the one-in-two chance forecast a quarter ago. Instead of using a single forecasting model or relying on the judgement of the Bank of England's Monetary Policy Committee, the WBSFS combines a group of state-of-the-art econometric models to produce judgement-free macroeconomic forecasts for UK GDP growth and CPI inflation. These forecasts are updated each quarter to reflect the latest data. By using model averaging, following well-established methods in statistics, meteorology and economics, the WBSFS takes a weighted combination of each models' forecasts, where higher weights are awarded to models which show the better recent forecasting performance.