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🇬🇧❗️Cable FX Macro Weekly Note: U.K. June Consumer Prices

**As seen in Risk In The Week report 07/14/23, subscribe at

U.K. headline consumer prices came in unchanged at 8.7% Y/y in May, the print came to beat the consensus of 8.4%. Core CPI continued its upward trend, the metric rose by 7.1% Y/y from the prior 6.8%, this was higher than the median survey of 6.8% and marked a fourth consecutive month of upside surprises. On a monthly basis, food prices rose by the slowest pace since January at 0.9%, restaurant prices accelerated to 1.0% from 0.7%, housing eased to 0.1% from 0.9%, rent prices eased to 0.3% from a record monthly pace of 1.4%. Economists expect inflation to ease into year-end, however, the consensus does not see CPI coming back to the BoE’s 2% over the forecast horizon. By end of the year, Goldman Sachs sees inflation at 4.8%, Nomura and Société Générale pencil inflation rising by 5.1%, UBS expects the rate at 4.0% and Barclays forecasts 3.8%. ING reminded us the relevancy of the release as they said the BoE's August decision will depend entirely on the June inflation report, they viewed a 50bps rate hike as a possibility as wages continue to rise. ING expects headline inflation to dip on base effects from energy prices, they also noted that petrol/diesel pump prices fell by 2.6% in June. The desk is set to see services prices rising by 7.4% and warned that this would be a post-covid high, the component has recently gained more attention from the BoE given its stickiness.



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