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Cost of living crunch to keep inflation below 3% next year
📅 Date: April 13, 2026
A crushing cost of living is expected to stifle consumer demand in 2026, keeping inflation well below the Central Bank’s target range and creating a complex environment for interest rates, according to a new analysis by First Capital Research (FCR).
While the Central Bank has guided markets to expect inflation to rebound and stabilise around its 5 percent target by mid-2026, FCR challenges this view, projecting that inflation will average just 2.8 percent throughout the year.
This underscores a significant disconnect between the official policy expectations and ground-level economic reality, driven largely by what analysts describe as “demand destruction”.
Although the government forecasts paint a picture of robust growth, the households are grappling with a high cost of living that has eroded disposable income. The report notes that while inflation has recently ticked up to 2.1 percent in October 2025, due to the tariff reversals, the underlying consumer demand remains weak
