UK core inflation likely to rise to 1.6% in 2016

Against the decline in oil prices and tentative signals that past services sector wage rises might have started to filter through consumer prices, UK inflation expectations are in a upward trajectory.

"We now expect CPI inflation to average +0.1% in 2015, +1.2% in 2016 and +1.8% in 2017 (before: 0.0%, 1.3% and 1.8%, respectively). Underpinning our updated profile is the expectation that core inflation will rise from +1.1% this year (same as before), to +1.6% in 2016 and +1.7% in 2017", says Barclays in a research note.

Given there will be persistence in the recent oil price sell off more than expectations, the negative effect on Headline inflation is likely to be solid that any preliminary upward pressures coming from potential recovery in services prices at this stage, are likely to unfold in slow momentum.