MNI DATA PREVIEW: March Inflation Seen to Rise Slightly

By Shaily Mittal

     LONDON (MNI) - UK inflation is expected to ascend further in March after a

slight rise in February.

- UK CPI Mar Y/Y, Bbg consensus at 2.0%, MNI Median at 2.0% vs Feb 1.9%.

- UK CPI Mar M/M, Bbg consensus at 0.2%, MNI Median at 0.2% vs Feb 0.5%.

- UK Core CPI Mar Y/Y, Bbg consensus at 1.9%, MNI Median at 1.9% vs Feb 1.8%.

- UK RPI Mar Y/Y, Bbg consensus at 2.6%, MNI Median at 2.6% vs Feb 2.5%.

- UK RPI Mar M/M, Bbg consensus at 0.2%, MNI Median at 0.2% vs Feb 0.7%.

     CPI inflation picked up to 1.9% y/y in February from a two-year low of 1.8%

in January, underpinned by rises in food, alcohol and tobacco. Core inflation,

in contrast, fell to 1.8% y/y in February from 1.9% in January, led by an easing

of clothing and household goods prices.

     Despite the expected increase in inflation for March, CPI should remain

below the BOE's target of 2% for Q1 as a whole, in line with the expectations of

the Monetary Policy Committee in February. The energy price cap set by Ofgem

since January has been pivotal in depressing CPI inflation in Q1.

     Mostly No Surprises in March

     Since 2010, analysts have rightly predicted inflation four times out of

nine for March, with three positive surprises and two misses. Despite a likely,

"no surprise" scenario for March, concerns of a positive surprise are

understandable, given the weak sterling exchange rate in the second half of last

year and raw material shortages.

     Inflation and Sterling Hand-in-hand

     Since 2018, inflation has edged down more than expected, denting market

expectations for interest rate rises from the BOE leading to weakness in

Sterling against the US dollar throughout the second half of last year.

     Inflation is expected to rise over the next couple of months given a

planned rise in the utility price cap in April by Ofgem and higher cost of

imported raw goods materializing from the lagged impact of Sterling's previous

depreciation.

     BRC-Nielson Shop Price Index Climbs in March

     The BRC-Nielson survey showed shop price inflation accelerated to a

six-year high of 0.9% in March from 0.7% in February.

     The rise in commodity prices underpinned food price inflation that

accelerated in March to 2.5% on the year from 1.6% in February, the highest

since November 2013. Non-food prices were at the same level as last year, but

grew 0.9% on the month.

--MNI London Bureau; tel: +44 203-586-2224; email: shaily.mittal@mni-indicators.com