Monetary Policy & Inflation | Rates | UK
UK Core Inflation Drop Adds to BoE Dovishness – Watch the Detail
- By Henry Occleston
- 6 min read
Summary
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- August UK headline and core inflation missed expectations, driven by a record (ex-COVID) drop in accommodation price, as well as misses in transport, furniture and clothing inflation.
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- The BoE saw the numbers on Monday, so they will be included fully in the decision whether to hike rates on 21 September.
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- It is a dovish surprise, but one partly driven by idiosyncratic moves in transport services (particularly air-fares) and the unprecedented drop in accommodation.
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- We have been dovish the BoE for some time and think they could have paused some time ago, but we err towards them providing a final hike this week.
Summary
-
- August UK headline and core inflation missed expectations, driven by a record (ex-COVID) drop in accommodation price, as well as misses in transport, furniture and clothing inflation.
-
- The BoE saw the numbers on Monday, so they will be included fully in the decision whether to hike rates on 21 September.
-
- It is a dovish surprise, but one partly driven by idiosyncratic moves in transport services (particularly air-fares) and the unprecedented drop in accommodation.
-
- We have been dovish the BoE for some time and think they could have paused some time ago, but we err towards them providing a final hike this week.
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