That seems to be on the cards, with Deutsche seeing headline annual inflation slowing to 9.73% in March while core annual inflation is estimated to slip to 5.85%. For some context, the economist estimates for both are seen at 9.8% and 6.0% respectively.
That said, the firm says that the risks to their forecasts this week are tilted to the upside. They mention that there is still a big question mark on the persistence of services inflation and that is likely to remain resilient in the months ahead.
However, they do expect the price momentum for core goods to soften with supply chains normalising further and food inflation also likely to slow from the summer onwards. The latter though is still anticipated to remain more robust than normal for much of the year.
Some commentary on the big picture outlook:
"Overall, we remain optimistic that prices will slow this year with CPI getting back to target around Q3-24. Risks to our forecast remain to the downside, particularly on headline inflation. But we do see some upside risks to core inflation. Corporate pricing power remains strong. Inflation expectations remain unanchored, relative to the BoE’s target. And wage gains remain inconsistent with the Bank’s 2% mandate. This is a key reason why we see the Bank of England’s terminal rate landing zone as 4.25% to 4.75% — explicitly pointing to upside risks to our Bank Rate projections. We will be looking more closely at corporate pricing power in forthcoming pieces, which will be key in assessing the monetary policy outlook."
