UK CPI Preview: Forecasts from four major banks, sharp decline in inflation
|The United Kingdom will release the Consumer Price Index (CPI) report on Wednesday, March 20 at 07:00 GMT and as we get closer to the release time, here are the forecasts by the economists and researchers of four major banks regarding the upcoming UK inflation print.
The annual headline inflation is forecast to have grown at a slower pace of 3.6% against 4.0% in January. In the same period, core inflation – which excludes volatile food and energy prices – is forecast to have decelerated to 4.6% from 5.1%. If so, headline would be the lowest since September 2021 but still well above the 2% target.
TDS
We expect UK headline inflation to take another step down in February to 3.4% YoY, thus leaving it a touch below the Bank of England's forecast of 3.5% YoY. Core inflation will likely also fall quite a bit this month, we forecast a 0.6ppts decline to 4.5% YoY, which would be the lowest year-on-year rate since January 2022. We expect services inflation at 6.0%, 0.1ppts below the MPC's forecast. Our unrounded forecasts for headline/core are 3.43%/4.46%, so we see risks skewed to the upside for headline inflation but to the downside for core. Overall, barring any major surprises to this month's data, headline inflation is still set to fall below target in April and remain below target for the rest of the year.
Deutsche Bank
We expect a sizeable move lower, including the headline CPI slowing to 3.4% (vs. 4% in January) and core to 4.5% (5.1%).
SocGen
After a three-month period of core being stuck at 5.1%, we expect a sharp 0.6pp decline in February to 4.5% YoY, its lowest rate in two years. This decline should contribute to a 0.6pp fall in headline inflation to 3.4% YoY.
Citi
CPI Inflation, February – Citi Forecast 3.4% YoY, Prior 4.0% YoY; CPI Core, February – Citi Forecast 4.4% YoY, Prior 5.1% YoY (goods prices still subdued).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.