**As seen in Risk In The Week report 05/19/23, subscribe at cablefxm.co.uk/reports
U.K. March consumer prices eased to 10.1% Y/y from the prior 10.4%, the pace was faster than the consensus median of 9.8%. The core metric remained unchanged at 6.2% Y/y, CPIH eased to 8.9%. On a monthly basis, headline prices expanded by 0.8%, the core figure rose by 0.9%. Food prices eased to 1.1% M/m vs the prior 2.1%, clothing slowed to 1.6% from the prior 2.6%, household prices came in lower at 1.3% from the prior 1.8%. The month recorded a decline in fuel prices, this accounted for 0.4 percentage points off the headline. Recent focus has lied on the core services print, the metric held steady at 6.9% Y/y, this was above the BoE’s February forecast of 6.8%. Economist's median forecast see headline prices falling to 3.8% Y/y by the fourth quarter of this year, the May survey compiled by Bloomberg saw the projection raised from the prior 3.4%. However, the forecast median implies about a 6.0 percentage point decline from current levels, the slowdown is more aggressive than the BoE's projection of 5.0%. Economists at BMO remain more cautious and expect CPI to stay high as they pencil a 6.1% Y/y by year-end, J.P. Morgan projects prices rising by 4.3%, ING and Nomura stand below the consensus at 3.5% and 3.7%, respectively. The desk at Rabobank said that if inflation is set to persist, there will be further tightening by the BoE, they added that the MPC did not push back against the recent upward pricing in the OIS curve during the May meeting. For June, Rabo expects a pause from the central bank and noted that the most recent MPC forecasts do not signal that rate cuts will be coming soon.
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