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

**As seen in Risk In The Week report 06/15/25, get full access now! cablefxm.co.uk

U.K. April inflation was reported at 3.5% Y/y, up from 2.6% in March 2025, it marked the highest inflation rate in over a year, driven primarily by rises in household energy bills and transport costs. However, the ONS later identified an error in vehicle excise duty (VED) data provided by the Department for Transport, which overstated the CPI by 0.1 percentage points. The corrected rate should have been 3.4%, but per ONS policy, the published figure was not revised. core inflation rose to 3.8% from 3.4%, above the consensus expectation of 3.6%. This increase was partly due to a sharp rise in services inflation, which climbed to 5.4% from 4.7%, driven by significant airfare increases.

The largest April consumer prices contributions came from housing energy bills at almost 1.0 percentage point and recreation and culture at 0.5 percentage point. The former was the largest upside contribution to CPI since late 2023. The desk at ING said that more muted service-sector price pressure should have helped drag headline inflation a little lower in May. Back in April, services inflation surged on account of Easter's timing, as well as a dramatic increase in road tax, they wrote. Also, ING noted the Office for National Statistics has since conceded it overestimated this tax change and that should help bring services inflation almost a percentage-point lower. For May, ING forecasts inflation metrics in line with the consensus survey but it sees services inflation rising below the median at 4.6% Y/y.