Tuesday preview: UK inflation to improve in March, analysts expect

UK inflation on Tuesday is expected to show a slight improvement in March but is forecast to remain well below the Bank of England’s 2% target.

Analysts have pencilled in 0.4% year-on-year growth for the consumer price index in March, compared to 0.3% a month earlier.

On the month CPI is projected to rise 0.3% following a 0.2% increase in February.

While oil prices have recovered slightly, fierce competition between supermarkets and discount retailers continues to keep food prices low.

“Higher petrol prices and the Easter effect on air fares will be offset by additional utility bill cuts, and continuing food price deflation,” said HSBC.

“Goods price inflation may even dip back lower (from -1.6% in February).”

Excluding volatile items such as fuel and food, CPI is estimated to rise an annualised 1.3% in March following a 1.2% gain.

Worried about persistently weak inflation, the BoE is expected to keep interest rates unchanged once more on Thursday.

“We would expect that the Bank will err on the side of caution and expect steady rates at least until February 2017,” according to Rabobank.

Tuesday 12 April

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