UK inflations cools… but less than expected

The latest UK inflation report shows that consumer prices eased to 2.3% from a year earlier. Yet, despite the sharp drop from March’s Y-o-Y inflation print of 3.2%, the reading was higher than the 2.1% expected. Strong wage growth is keeping services inflation stubbornly higher, notching slightly lower to 5.9% from 6% a month earlier. Core inflation which excludes food and energy costs fell to 3.9% from 4.2% in March. Whilst the latest inflation readings do not impair the Bank of England’s (BOE) ability to cut rates, it does however, push back the timing of cuts to November which markets have priced in. The trajectory of inflation remains positive progressing closer to the BOE’s 2% target but will do so along a bumpy path.