Updated projections in the Bank of England's Inflation Report were on balance little changed from Feb, maintaining the expectation that inflation will hold around zero over the course of Q2 with a downside skew to the inflation projection overall.
While we see CPI data for April (Tue) holding at a record low rate of 0.0% despite some pickup in fuel prices, even a mild negative print would not come as a marked surprise to the MPC. Importantly, the MPC appears to have become a little more relaxed about a deflationary dynamic taking hold with inflation expectations, in their view, remaining consistent with the 2% inflation target. - notes Lloyds Bank
Meanwhile, signs of a slower pace of high street discounting could weigh on growth of retail sales volumes (Thu), although underlying momentum seems likely to remain robust. In the aftermath of the Inflation Report, the minutes of May's MPC meeting (Wed) are unlikely to impart much new information.
