Oil and GBP to keep UK inflation subdued – Danske Bank

FXStreet (Edinburgh) – Sverre Holbek, Senior Analyst at Danske Bank, expects consumer prices in the UK economy to pick up pace later in the year albeit at a slower pace than anticipated.

Key Quotes

“In the UK, we believe CPI inflation increased to 0.1% y/y in July from 0.0% y/y in June. We think that core CPI inflation increased to 0.9% y/y in July from 0.8% in June”.

“The Bank of England’s focus appears to have shifted back to inflation in the wake of lower oil prices and stronger sterling”.

“We expect CPI inflation to stay very low for the rest of the year and then pick up in January but the lower oil prices and strong sterling imply that the pickup will be smaller than previously anticipated”.

“As the BoE wants to see CPI inflation stabilise/move higher before hiking, we now expect it to deliver the first hike in Q1 16, most likely in February (previously November 2015)”.

Sverre Holbek, Senior Analyst at Danske Bank, expects consumer prices in the UK economy to pick up pace later in the year albeit at a slower pace than anticipated…

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