I think we must not forget that the month-on-month data is just a newsnoise. The real inflation is calculated year-on-year:


Yes, I do think that the chance of sliding into deflation is very high, but that’s not going to happen within the next 18 months. So far we have inflation and it’s running at 4% for headline number. The inflation usually peaks during the late stages of the recession, so I expect few more months before we can talk about disinflation.

Another addition. During the economic boom I paid more attention to core rate but now, when the commodities boom is slowing down, I think the headline number is getting more important. But my preferred measure is the CPI deflator, details are here