UK: CPI inflation expected to rise to 0.9% in September - RBS

Research Team at RBS, suggests that after the UK’s headline CPI inflation remained at 0.6% (y/y) in Sep, below their forecast & the consensus at 0.7%, they forecast CPI inflation to rise to 0.9% in September, mainly reflecting energy price base effects.

Key Quotes

“Core CPI inflation is forecast to edge up to 1.4%.

Petrol prices are forecast to rise 1.25% m/m in September, raising the y/y rate to +1.5% y/y from -2.6% y/y (adding 0.13pp to CPI inflation). Utility prices are forecast to be largely unchanged in the month, but base effects will raise the y/y rate to -2.2% from -3.1% (adding 0.03pp to CPI inflation). Food inflation is f/cast to be little altered in September, though media reports of selective price discounting (12% cuts to some meat & poultry) suggests downside risks. Overall FBTE inflation is forecast to rise to -0.8% in September from -1.6%, adding 0.17pp to CPI inflation.

We do not expect any marked change in most of the high discretionary spending categories - consumer demand remains constrained by weak income growth. RPI inflation is forecast to rise to 2.1% in September from 1.8% in August. RPIX to rise to 2.2%.”