UK CPI inflation still avoiding a negative number

After the surprise fall in CPI inflation to precisely zero in February, and the prediction from the Bank of England in its February Inflation Report that "inflation ... will ... potentially turn negative in the spring" the markets are poised for a fall in inflation below zero in the coming months. 

Societe Generale expects the rate of core inflation to be stable at 1.2% yoy but there will be significant moves in the non-core items, food and energy. 

CPI food price inflation has fall steadily over the last two years (standing at -3.3% yoy in February) and the most recent readings from the BRC shop price survey suggest that trend continued in March. On the energy front, price cuts announced by several utility companies will come into force (average -1.3% mom). 

However, more than offsetting both of those influences will be the rise in fuel price inflation resulting from the 3.5% mom increase in petrol prices. The net result should be a very slight increase in the CPI inflation rate from 0.0% to 0.1% yoy, says Societe Generale.