• Prior +4.0%
  • Core CPI +4.5% vs +4.6% y/y expected
  • Prior +5.1%

The softer readings here should rebuff expectations for an August rate cut. Coming into the report, the odds of that were at ~97% while traders were pricing in ~66 bps worth of rate cuts for this year. We'll see how that changes when the rates market opens later.

As for the details, ONS says that the largest downward contributions to the annual inflation change was from food prices and restaurants and cafes. The trend in food prices is definitely encouraging and remains a welcome development for the BOE as we look towards the months ahead. That is if it can keep that way.


Services inflation remains sticky though, with the annual reading there seen at 6.1%. But at least that is down from the 6.5% reading seen in January.