Economists at Goldman Sachs said after the data release that they still expect inflation to increase moderately from here in the second quarter, albeit from a lower level, as base effects reduce the disinflationary impact of the utility price cuts.
“We expect inflation to stay below 1% for most of the year but expect a sharper acceleration at end-2014 to early 2015, as base effects related to the second round of utility price cuts push headline higher (…) Barring additional regulatory price cuts, inflation should reach the (3% medium-term) target in 2015.”
Analysts at JP Morgan said that inflation is likely to drift higher in the coming months and will jump above 2% year-on-year in December.
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