UK business investment was strong again in the fourth quarter of last year, according to figures yesterday which coincided with news of a sharp fall in people's inflation expectations.
National Statistics said business investment in the fourth quarter totalled £32.4bn - up 3.3% on the preceding three months and 11.1% higher than in the same period of 2005.
A survey from YouGov and Citigroup meanwhile showed the median of people's expectations of annual consumer prices index inflation in the next 12 months dropped from 2.7% in January to 2.4% this month.
These numbers provided further mixed messages on the outlook for UK interest rates. The strong investment numbers might at the margin give the Bank of England's Monetary Policy Committee more confidence about raising base rates again from their current 5.25%, having increased them by a quarter-point on three occasions already since last August.
However, MPC members are likely to be relieved by the fall in inflation expectations even though the latest reading is still significantly higher than their CPI target of 2%.
Meanwhile, the median forecast in a survey of 39 economists published yesterday by news agency Reuters was for UK growth of 2.7% this year. The general belief expressed in the poll was that interest rates would rise by one more quarter-point, with most expecting this in the second quarter but many still seeing an earlier move in March.
Median forecasts were that inflation would average 2.6% in the first quarter and 2.3% in the second, before tumbling to 1.9% in the third as household electricity and gas bills fell.
National Statistics will today publish its second estimate of fourth-quarter UK growth, with the City predicting this will be unrevised at an above-trend 0.8%.
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