🇬🇧Cable FX Macro Weekly Note: U.K. December CPI

**As seen in Risk In The Week report 01/13/22, subscribe at cablefxm.co.uk/reports

Headline U.K. prices eased in November to 10.7% Y/y from a prior 10.9%, while the figure is seen slowing down further in December, it is expected to stay in the double-digit level. The core figure came in at 6.3% Y/y, this was below the median survey of 6.5% and marked the first downside surprise since May. On a monthly basis, food turned out to post the largest gain at 1.1%, household prices came in unchanged from prior after rising 0.6%, communication prices slipped by 0.8%. With about 340 basis points of tightening delivered by the Bank of England, we’re set to receive December inflation figures to determine whether the central bank will meet or disappoint market pricing. According to data compiled by Bloomberg, the swaps market currently price in the BoE delivering an additional 100bps this year. Analysts at Natwest say that further interest rate hikes from this point on will not help the U.K. economy, so the Bank of England will be looking for a potential dip in inflation as it has been seen in the U.S. and the euro. Natwest says that gas prices are falling, and consumer spending is softer, they see downside risks in inflation relative to the BoE’s projections.