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New Methodology Suggests UK Inflation May Rise to 3.2 Per Cent at the Start of 2025
In Binner et al. (2024) we developed a method for predicting the future path of CPI inflation over a 12-month period by combining the monthly drop outs of past inflation (often called base effects) with a forecast of the future “drop ins” month by month. The forecasts were made using Multi-Recurrent Networks (MRNs), a class of recurrent neural network with a unique sluggish state-based memory mechanism, which were trained on past data. The data used was month-on-month (“monthly”) inflation, the CPI index itself, along with an ensemble of other predictors: 10 year interest rates, real GDP, PPI index for ... (full story)