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UK Feb Consumer Prices- Preview

UK Feb consumer prices (09.30 GMT) figures will probably show the economy nudging further towardsdeflation. 

Petrol prices fell further in February and three of the recently announced gas price cuts will show up inFebruary's figures for the first time. 

These two effects should together shave just under 0.1 percentage point off inflation. It is also possible that the supermarket price war pushes food price inflation down further. 

Capital Economics notes its forecasts as follows:

  • All in all, then, we think that inflation dropped from 0.3% to zero in February.

  • Likewise, the latest producer prices (09.30 GMT) are likely to confirm that price pressures at the start of theinflation pipeline are still extremely weak. 

  • As such, we forecast only a 0.5% m/m rise in output prices. This would leave the annual rate deep in negative territory and strengthen the case for thinking that CPI inflation will remain below 2% well into 2016. 

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