2024-03-20 12:15:00 ET
Summary
- February's inflation data showed further progress across the board, and the prospect of sharp falls in energy bills in April and July suggests headline CPI will be below 2% from May and for much of 2024.
- For the Bank of England, the focus is almost entirely on services inflation, where the progress has been more steady.
- If the services inflation and wage growth data surprise to the downside ahead of the June meeting, then there’s a chance we get a rate cut at this point.
By James Smith
UK inflation continued to head in the right direction in February and slipped further than expected to 3.4% from 4.0% a month earlier. A lot of this can be explained by food inflation, which is falling rapidly. On a month-on-month basis, producer prices for food have either been flat or slightly negative for a while now, and that's feeding through to consumers very noticeably. The annual rate of food inflation now sits at 5%, and we think that could be below 1% by June....
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U.K. Inflation Set To Fall Below 2% By May After Latest Data