UK: Disinflation path intact as CPI nears target – Deutsche Bank
|Deutsche Bank’s Chief UK Economist Sanjay Raja notes that UK inflation fell to 3% year-on-year, its lowest level since March 2025, driven by weaker core goods and food prices, while services inflation remains sticky at 4.4%. Raja still expects the disinflation path to hold, with CPI moving closer to 2% by spring and price momentum easing further into Q2-26.
CPI seen drifting toward 2 percent
"Despite stronger services price momentum to start the year, we see CPI taking another big step down in spring, as some of the big administrative prices wash out of the annual rate calculation."
"We expect CPI to track nearer 2% by spring."
"As some of the big price rises drop out of the annual rate calculation, slower administrative price rises will, by and large, see inflation (particularly services) drop lower through Q2-26, settling just around target."
"Altogether, we see price momentum slowing from around 3% y-o-y in Q1-26 to just over 2% y-o-y in Q2-26."
"We expect small upward gyrations through the year but see price momentum staying range bound between 2.2% y-o-y and 2.5% y-o-y."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.