UK: Inflation likely to slip into negative territory – TDS

By FXStreet FXStreet (Delhi) – Research Team at TDS, suggest that the UK inflation due next week is likely to slip into negative territory, given the drop in energy prices and strength of the pound.

Key Quotes

“CPI for August is out, and we expect the annual rate to once more dip into negative territory. The combined impact of past appreciation in GBP, coupled with a big drop in energy prices in August, is likely to lead to inflation of -0.1% y/y, slightly below consensus and the BoE’s last forecast of 0.0%.”

“Core inflation, too, should moderate somewhat, and we expect it to come in at 1.0% y/y (same as consensus). The downward moves in energy prices in recent weeks are expected to weigh significantly on total inflation over the coming months, keeping inflation below 1.0% (and thus in letter-writing territory) until the end of the year, and holding the BoE comfortably on the sidelines.”
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Source:: FX Street