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UK CPI falls unexpectedly

24th March 2021

Commenting on this morning’s UK inflation data, Melanie Baker, Senior Economist at Royal London Asset Management said:

“It is hard to get a clear read on underlying inflation when so much of the basket is imputed and when seasonal patterns are upset by lockdowns and social distancing restrictions. That picture should become clearer as we head through the second half of the year, following the government’s current ‘roadmap’ out of lockdown.

“UK inflation fell unexpectedly and strongly in February, but looking at the past several months together, CPI inflation remains in a range. It isn’t clearly trending anywhere, bumping around between 0.2% and 1% year on year since April 2020. Headline inflation should be pushed up more strongly in the next couple of months as positive energy price bases kick in.

“We are not expecting a rapid rise in underlying domestic inflationary pressure as the UK economy has taken such a hit over this crisis.”


The views expressed are the author’s own and do not constitute investment advice.