UK CPI Preview: Banks expectations from May report

As we head towards the release of UK CPI data for the month of May, here are the expectations as forecasted by the economists and researchers of major banks regarding the upcoming release.


“We look for CPI to decelerate a bit to 2.3% y/y in May, which leaves us a bit below consensus and BoE forecasts of 2.4% y/y. We're in line with consensus in looking for core CPI to slip to 2.0% y/y, but seem to see a smaller contribution from food and energy prices. This may see a bit of weakness in GBP, but we do think that the activity data is a lot more important right now than a tenth here or there on the inflation data; inflation is still certainly high enough to justify further tightening, but the BoE just needs to have confidence that economic activity is robust enough to absorb another rate hike.”

Danske Bank

“In the UK, we expect CPI core inflation to be unchanged at 2.1% y/y. CPI core inflation is still on a downward trend in the short term, as the impact of the GBP depreciation is fading.”


“We forecast a 0.1pp fall in CPI inflation in May (to 2.3%), with the risks to the upside. Reasons for a fall are: negative base effects related to household energy and recreation prices more than offsetting the upside from transport costs. An unchanged RPI-CPI wedge suggests a fall in RPI inflation to 3.3%.”



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