UK inflation forecast: May 2016 – RBS

By FXStreet Ross Walker, Senior UK Economist at RBS, suggests that the UK headline CPI is forecasted to remain at 0.3% in May, reflecting a stable Core CPI rate and a neutral food & energy contribution with modest upside risks.

Key Quotes

“We expect a broadly neutral contribution from FBTE: a modest upside impact from energy, a marginal downside influence from food.

Core CPI inflation is forecast to remain at 1.2% in May. Underlying wage and price pressures remain subdued.

We expect further modest utility prices cuts: -0.5% m/m in May, leaving the y/y rate barely altered at -4.3%.

Petrol prices are expected to show a 2.5% m/m rise, raising the y/y rate to -7.0% from -7.5%, making a negligible contribution to CPI (0.02pp).

Food price inflation is forecast to be little altered in May at -2.6% (y/y).

Overall FBTE inflation (CPI) is forecast to be unchanged at -2.7% (y/y) in May.

All-items RPI inflation is forecast to remain at 1.3% (y/y) in May.”
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Source:: FX Street