U.K. Inflation Forecast Update

U.K. both consumer and producer price data came in again largely in line with expectation.

The country's CPI inflation is expected to average 0.0% this year and 1.3% next year, a touch below our previous forecast of +0.1% and +1.4%, respectively, mainly reflecting a slightly lower assumption for core prices; indeed, being the only component surprising slightly to the downside in September relative to the projection. The RPI profile has also moved lower for the same reasons.

"The CPI inflation is likely to dip further into negative territory in October declining to -0.2% y/y, before slowly returning to positive territory around the end of the year, supported by energy base effects. However, the core prices to hover around 1.0% (on average) until year-end. According to our latest profile, headline CPI inflation is likely to reach 1.7% towards the end of 2016, slightly below a peak of +1.8% previously projected for November 2016", foresees Barclays.