- Prior +10.1%
- CPI +1.1% vs+0.6% m/m expected
- Prior -0.6%
- Core CPI +6.2% vs +5.7% y/y expected
- Prior +5.8%
- Core CPI +1.2% vs +0.8% m/m expected
- Prior -0.9%
This is not going to make the BOE’s task any easier going into their policy decision later this week. Markets are anticipating that the central bank will hike by another 25 bps on Thursday and then be done with the tightening cycle. But when you look at the sort of underlying inflation pressures, it is hard for policymakers to say that they have done enough.
Looking at the details, the monthly jump owes much to a jump in prices from restaurants and cafes, food, and clothing. This was then partially offset by downward contributions from recreational and cultural goods and services, and motor fuels. From a core standpoint, it is worrying that food price inflation continues to surge higher (as seen below).
The pound has gotten a jump from 1.2230 to 1.2260 against the dollar but it’s hard to see this as being a decisive factor to shift the thinking at the BOE. I guess we shall see later in the week.