Underlying inflation to soften, regardless of oil prices

Inflation has fallen in most economies, due partly to lower energy inflation. Our forecast that oil prices will stabilise in the months ahead is subject to upside risks from tensions in the Middle East. But against the current backdrop of weak global demand, we think that even a sharp surge in oil prices would have only a modest and temporary effect on headline inflation. Meanwhile, growing evidence of a slowdown in labour markets suggests that core inflation will continue to weaken around the world.