UK CPI: To move back into positive territory – ING

By FXStreet FXStreet (Delhi) – James Knightley, Senior Economist at ING, suggests that the UK inflation will move back into positive territory, but with oil well below $40/bbl CPI will be slow to return to target.

Key Quotes

“Headline UK inflation is likely to move back into positive territory in November and if anything, we see a little upside risk to the consensus view. Petrol prices did fall last month – the Automobile Association state that the national average fell 1.5p per litre (ppl) to 109.2 ppl while diesel fell 0.8 pence to 110.2ppl – but this is substantially less than the 4.3ppl decline in petrol and 3.9ppl drop in diesel (both in nominal and percentage terms) seen in November last year. We also feel that the discounting in the lead up to “Black Friday” sales was less aggressive than last year. Consequently, we look for the annual rate of headline CPI to come in at 0.2%YoY versus the 0.1%YoY prediction of consensus.”

“Nonetheless, with Brent crude now trading at just $37.50/bbl, inflation is unlikely to rise rapidly anytime soon. Indeed, the competitive supermarket environment will keep food price growth constrained while unseasonably warm weather has meant we have seen some aggressive discounting on …read more

Source:: FX Street