📝 Cable FX Macro Weekly Note: U.K. May Inflation Rate

**As seen in Risk In The Week report 06/18/2022, cablefxm.co.uk/reports

U.K. headline consumer prices for April jumped to 9.0% from 7.0% Y/Y, the metric came close to the survey median of 9.1%. Expectations came this high as Ofgem lifted the energy price cap sending household utility prices 47% higher, Bloomberg reported that the total contribution from energy to headline price growth rose to 3.2pp from 1.7pp in March. The core figure came in line with estimates at 6.2% Y/Y, up from the previous 5.7%. On the month, headline prices saw a 2.5% increase with housing recording a +13.2% M/M, the only contractions were seen in recreation and household prices. The most recent survey compiled by Bloomberg showed economists estimating 8.9% CPI Y/Y in 2Q, this was a revision from 8.6%, economists expect inflation to accelerate by 8.1% Y/Y in 2022, up from a previous forecast of 7.5%. For next year, estimates show inflation will stay way above the BoE’s target. Analysts at ING see a slight acceleration in headline prices and do not expect the rise in petrol to feed until the June and July CPI figures. The desk sees inflation declining meaningfully by 2023 as energy effects fade, and wage pressures begin to ease, ING also says that next week’s release will determine whether the BoE hikes the Bank Rate by 50bps or less.