UK CPI data is due at 0930 GMT
SG:
- We expect minor offsetting moves in the goods and services components of core CPI inflation so that it stays at 1.9%.
- However, in the noncore, i.e. commodity part of the CPI basket, we expect a fall. Food price inflation seems to have bottomed out and might eke out a very modest increase but the dominant effect will be a fall of 1.5% mom in fuel prices which should shave off nearly 0.1p from CPI inflation.
- The result should be that CPI inflation fall from 2.1% to 2.0% the inflation target, exactly two years since the target was last reached. The calculation is close to the cusp to two decimal places, though, so there is some risk that the figure remains at 2.1% yoy
Citi:
- expect headline inflation at 2% on lower energy inflation.
- expect core inflation at 1.9% in January. We will also focus on whether the RPI-CPI wedge will stay at its 5-year low of 0.6pp, largely driven by a decline in housing-related inflation
