Justin had the UK January CPI data here overnight:
Comments on the data via Deutsche Bank:
January CPI printed well below expectations
- core CPI easing materially
- What was behind the slowdown in inflation momentum? A combination of easing core goods prices, falling pump prices, and softening non-core services prices (particularly travel and package holidays). Weight changes dragged on CPI too, with 2023 weight changes shaving off a couple of basis points from headline CPI.
- headline CPI came in bang in line with the MPC’s forecast
- services CPI — the key metric the MPC will be looking at — slipped further than the Bank thought
- Core services was broadly stable, once we strip out the more volatile items
- overall core CPI, printed a tenth above the MPC's forecast
And, DB on implications for the Bank of England Monetary Policy Committee
- With regards to monetary policy, we still see a case for one more hike (25bps) before the MPC opt more explicitly for a 'conditional pause'. That said, slowing momentum in both the wage and inflation data will likely make next month's rate decision more finely balanced than markets expect.
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2023 dates for the BoE MPC:
