UK: CPI to decelerate a bit to 2.3% y/y in May - TDS

Analysts at TDS are looking for UK CPI to decelerate a bit to 2.3% y/y in May, which leaves them a bit below consensus and BoE forecasts of 2.4% y/y.

Key Quotes

“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.”

“The second round of voting takes place this evening in the House of Commons, with MPs scheduled to vote on customs union and EEA amendments around 7pm London time. The EEA amendment will almost certainly fail, but there's a chance the customs union amendment passes, which would require the UK government to report back on its efforts to stay in the customs union (but not bind it to do so).”