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UK inflation comes in hotter than forecast

Interest rate hike from the Bank of England likely tomorrow

22 March 2023

Before we get to the real market moving event of the day, that being the Federal Reserve interest rate decision later today, let us not ignore those data points that still guide central bank policy. Looking at the UK inflation releases this morning, we can see that inflation remains a persistently noisy cat, long escaped from the bag. Headline and core CPI, input PPI and RPI all came in hotter than forecast. Headline CPI rose 10.4% versus expectations of a 9.9% increase and core CPI rose over the previous month to 6.2% when all expected it to be lower. This makes a hike from the Bank of England likely tomorrow. These are not comfortable numbers and once again are going in the wrong direction for the bank and it will have to continue to act hawkish. Failure to do so under the guise of financial instability risks from the current banking crisis will likely be a major policy mistake.

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Charles Hepworth

Investment Director
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