We ask fund managers for their top stocks or sector picks for 2012.
Strategists have predicted inflation will fall back to target in the New Year when the VAT rise is stripped out of figures, freeing the Bank of England to pump in more money to stimulate the economy.
Income sector heavyweights return to form after paying the price for anti-cyclical stance.
Investors stick with Tesco as numbers released last week show top supermarkets are feeling the burn from difficult market conditions.
An imminent interest rate hike would be the ultimate policy error by the Monetary Policy Committee, which should not raise rates before Q4 if inflation is still high, says Caspar Rock at Architas.
The top rate of VAT has risen from 17.5% to 20% as the government looks to boost tax revenues to cut the UK's debt levels.
There are still opportunities in the UK market despite a low level of economic growth, according to Slater Investments' CIO Mark Slater.