CPI number comes in higher than markets expected
24 May 2023
UK inflation decreased below its record-breaking double-digit level to 8.7% in April compared to 10.1% year-on-year the previous month. Welcome news perhaps but this was higher than expected (the average forecast was for a fall to 8.2%) and it keeps pressure on the Bank of England to remain skewed to a monetary tightening stance, with a 5% base rate level in the months ahead more than likely after this inflation number. Core inflation (excluding food and energy) increased to 6.8% - the highest it has been in this current cycle. It will concern policymakers that the jump in energy costs has now translated into implicit price effects on everything else. Everything is substantially higher in price than it was before Russia launched its assault on Ukraine. Prices are rising slightly less than they were a month ago, but the cost of living pressure for the UK consumer continues.
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