UK Core CPI y/y

This morning has opened with some better than expected news from the Office for National Statistics or ONS UK inflation figures. The Consumer Prices Index (CPI) rose by 2.8% in the 12 months to May 2026, unchanged from the 12 months to April. So the same rate of annual inflation as last month and in the circumstances the monthly rise was relatively benign. On a monthly basis, CPI rose by 0.2% in May 2026, the same rate as in May 2025. If you heard an enormous sigh of relief that will have been from the Bank of England. The number ...

U.K. inflation eased to 2.8% in April, preliminary data from the Office for National Statistics (ONS) showed on Wednesday. Economists polled by Reuters had expected the inflation rate to drop back to 3%, cooling from 3.3% in March, largely due to an energy price cap introduced by the U.K.’s energy regulator Ofgem on April 1. Consumer prices are expected to continue to increase, however, as higher energy costs due to the Iran war continue to materialize. “There was a notable fall in annual inflation led by lower electricity and gas ...

Markets behave as if the UK inflation process has changed. The data suggest it has not. Britain has been hit by one shock after another since 2020 — pandemic supply disruptions, the energy crisis after Russia’s invasion of Ukraine, the gilt market episode under Truss, and now renewed pressure from the Middle East. Each has tested the system in a different way. But the underlying inflation process appears largely unchanged. That matters now. Inflation has been slow to fall, and the MPC is caught between a weakening labour market and a ...

U.K. inflation jumped to 3.3% in March as the Iran war sparked a sharp increase in fuel prices, preliminary data from the Office for National Statistics (ONS) showed Wednesday. Economists polled by Reuters had expected the inflation rate to accelerate to 3.3%, up from 3% in the 12 months to February. The latest data is the first hard evidence of the Iran war’s impact on consumer prices in the U.K. The rise in inflation was largely due to increased fuel prices, which saw their largest increase for over three years, Grant Fitzner, ...

Current pricing for the Bank of England looks extreme. Markets are pricing three hikes this year, albeit those expectations are likely being distorted by poor liquidity in the swaps market. We don’t think it is at all clear that the bar for rate hikes has been met, at current levels of oil and gas prices. Our revised Bank of England base case is a pause throughout 2026, with rate cuts resuming in early 2027. Admittedly, nobody knows exactly where the threshold for hikes truly lies; last week’s meeting didn’t give much away. But last ...