UK inflation: descending towards a new trough
- UK inflation data for Feb-20 were broadly in line with expectations as the CPI printed at 1.7% and the RPI at 2.5%. Transport and recreation were surprisingly resilient, but housing was weaker, at least relative to my forecast.- Covid-19 is likely to disrupt these data in the coming months. So far, there is only limited evidence of surging demand in supermarkets stoking prices (mostly non-food and bread). Meanwhile, fruit, veg, and sugary item prices have all crashed.
- I still expect headline inflation rates to slow over the next few months to a new trough of 1.1% in July. Difficulty recording the Easter rise in airfares is partly to blame. Summer seasonals also look likely to be a bit softer in 2020.
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