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Core goods and food CPI inflation fell materially over 2023 and early 2024 (Chart 2.20), following declines in the prices of key inputs such as energy and other externally driven cost pressures. Projected contributions to cumulative change in CPI inflation from December 2024 (a) The increase in employer NICs is also assumed to have a small upward impact on inflation as firms pass on higher costs to their prices. This is made up of a rise in the cap on bus fares and the introduction of VAT on private school fees, which push up on services inflation from January, along with an increase in water bills taking effect from April. Collectively these are projected to add around ½ of a percentage point to headline inflation by 2025 Q2 (Chart 2.19). The Ofgem energy price cap for the typical household has risen from £1,568 in July 2024 to £1,738 in January 2025 and is expected to rise somewhat further in April.
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