Heads up for UK inflation data due Tuesday - previews
The data is due at 0930 GMT, inflation indicators from the UK for January
Previews (in brief), via ...
- We expect headline CPI inflation to remain unchanged in January at 3.0%, supported by a 0.3pp rise in core inflation to 2.8%. Meanwhile, we forecast CPIH inflation to edge up 0.1pp to 2.8%.
- We expect a small decline in CPI inflation in January to 2.9% from 3% in December. We expect more notable declines over the coming months thanks to the inflationary effect of past falls in sterling beginning to unwind. We see CPI inflation falling below 2.5% by mid-year.
- As for RPI inflation we see that falling a tenth too, with downside risks on account of a possible unwind in the RPICPI wedge (which rose sharply in December).
- A feature of the January PMI and CBI manufacturing surveys was a sharp rise in the output price indicators (the latter to its highest since 1984). This explains our forecast for a strong rise in official output prices at the core and headline levels (0.4% m-o-m). We expect sterling's rise during January to almost offset the rise in dollar crude oil prices when it comes input prices.