Published by Global Banking & Finance Review®
Posted on February 27, 2026
2 min readLast updated: February 27, 2026
BoE chief economist Huw Pill warned policymakers not to over-read the fall in UK headline inflation to 3.0% in January 2026, noting much of the near-term drop is driven by one-off, regulated-price and fiscal effects. With core and services inflation still elevated, he argued underlying pressures rem
LONDON, Feb 27 (Reuters) - Bank of England Chief Economist Huw Pill said on Friday that the central bank should not be too reassured by falls in headline inflation where these are driven by one-off factors, as underlying price pressures continued to persist.
The BoE forecasts that consumer price inflation - which fell to 3% in January - will drop back to close to its 2% target in April, when cuts in regulated energy prices take effect and the impact of regulated price rises a year earlier drop out of the annual inflation series.
"I think it is ... important to recognise that the (disinflation) process is still incomplete. We shouldn't be lulled into a false sense of security by movements in headline inflation which are partly driven by fiscal events or other events," Pill said in a webinar hosted by Britain's Society of Professional Economists and consultancy firm Elgin Advisory.
"Underlying inflation is probably still running above target," he added.
Earlier this month, Pill said that he believed the underlying rate of inflation in Britain risked settling at a rate of around 2.5% and that surveys of businesses' price- and wage-setting plans suggested these may pick up again, despite headline inflation being due to fall back to target.
Pill voted against the BoE's last three interest rate cuts and in minutes of this month's Monetary Policy Committee decision he said rates had been cut too fast and that inflation pressures "still needed to be contained and eliminated".
(Reporting by David Milliken; writing by Suban Abdulla; editing by Sarah Young)
He said falls in headline inflation can be driven by one-off factors such as fiscal events or regulated price changes, while underlying inflation pressures may still persist.
Pill said the disinflation process is still incomplete and that underlying inflation is probably still running above target.
He said earlier this month that the underlying rate of inflation risked settling at around 2.5%.
He voted against the BoE’s last three interest rate cuts and said rates had been cut too fast, with inflation pressures still needing to be contained and eliminated.
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