Analysts at TDS suggest that UK inflation is likely to have continued its march upward in June, with headline inflation edging up to 3.0% y/y (mkt: 2.9%) which is an important level, but not one that requires an explanatory letter from the Governor to the Chancellor.
“While petrol prices likely fell in the month, energy companies have been hiking their prices, and this continued into June. Core inflation, meanwhile, is likely to have remained at 2.6% y/y in the month (same as mkt). These won’t be the peaks for inflation this year, either – core is likely to rise another 0.1 or 0.2ppts into the autumn, while headline inflation could jump into the mid-3% range if oil prices pick up as we expect into the end of the year. This will undoubtedly heat up debate about a (single) rate hike later this year, though we think tepid economic growth should keep a lid on rates.”
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