UK CPI: Downside risks to inflation - TDS

Research Team at TDS, sees downside risks to UK inflation, with headline CPI inflation expected at 0.6% y/y levels.

Key Quotes

“April’s CPI will ultimately be determined by a number of one-off special factors such as an unwind in travel-related service price gains from the early Easter holiday, late-March cuts to home heating gas prices that weren’t picked up in the March CPI, and the increase in tobacco taxes in the March budget (also missed in the March CPI). Underlying all this, the depreciation of sterling since November is likely to continue to support inflation somewhat.

Even accounting for a full unwind of higher March travel service prices, we see downside risks to inflation, with headline CPI inflation at 0.6% y/y (consensus: 0.5%) and core at 1.6% y/y (consensus: 1.4%).”