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UK: CPI inflation to witness modest rise in December – Lloyds Bank

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Jan 19, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

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    FXStreet (Delhi) – Research Team at Lloyds Bank, notes that the UK CPI inflation in November recovered from 2015’s second bout of ‘shallow deflation’, rising to 0.1% y/y.

    Key Quotes

    “The ‘core’ rate, excluding energy, food, alcohol and tobacco - also firmed, rising further to 1.2% y/y. With the upward push in the core rate broadly spread, November’s release provided some reassurance about the durability of inflation trends.

    Nevertheless, with oil prices since the beginning of December sliding from around $45 to below $30, the long-anticipated upward push from energy base effects is likely to be substantially weaker than previously expected.

    Forecourt fuel prices in December have declined by around 2.9%, and the weakness of gas prices points to the likelihood of a move lower in retail energy tariffs over the coming months.

    We expect a modest further rise in CPI inflation in December to 0.2%, but on current projections do not expect to reach 1% until late in 2016.”
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