The week ahead

As expected, the halving in the price of oil is having the inevitable effect of lowering prices across the eurozone sufficiently to push the currency union into deflation. Forecasters are expecting the same downward pressure to affect UK inflation figures out on Tuesday where the annualised figure is likely to fall from an already weak 1% to around 0.7%, a new 12-year low. However, news on industrial output and employment out of the USA later in the week will likely show continued economic recovery similar to that being seen in the UK and we do not expect either bad news on eurozone or falling UK inflation to alter the Bank of England's stance delay interest rate rises later in 2015.