Improved outlook for inflation, activity and even Brexit

It may seem odd that we are revising down our CPI inflation forecast when investors’ concerns about the stickiness of inflation are growing. But the revisions are triggered by the further fall in the wholesale gas price. And as that will mean the drag on real household disposable income will be smaller, it will add to the recent resilience of the real economy and underlying price pressures. While we still expect a recession, it may come later and turn out to be shallower than we currently anticipate.