Halister News

(Bloomberg) -- U.K. Jan. CPI y/y is expected to nudge higher for a third month even as slide in oil prices may keep headline number below the BOE’s 2% target throughout 2016.

• NOTE: U.K. Jan CPI est. 0.3% y/y vs prior 0.2% (majority of forecasts in the range of 0.3% to 0.5%); core CPI est. 1.3% y/y vs prior 1.4%
• The first reading of the year often carries more uncertainty than usual thanks to a re-weighting of the basket of goods, BI economist Dan Hanson writes
  • Smaller declines in fuel prices between Dec. and Jan. compared with the same point last year, and a weakening pound, are likely to have a positive impact on the headline figure
• Expect headline CPI to print at 0.5% y/y, as base effects from oil prices and food price wars fall out, Barclays analysts say
• RBC analysts too expect a reading of 0.5% for Jan. but say energy providers cutting bills and the dramatic downward moves in the oil price means expect CPI inflation will rise to 0.9% y/y by end-2016 vs 1.2% prior forecast
• NOTE: Inflation as low as it is, has had an impact on nominal wage settlements; an immediate rate rise not necessary, BOE’s McCafferty told WSJ yday