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UK inflation is set to accelerate in April to 1.5% year-on-year, following the uptick to 0.7% in March. This would mark the highest level since March 2020 -- when CPI also rose 1.5% y/y -- but remain below the Bank of England's 2% target for a 21st straight month. Core inflation is seen slightly higher at 1.3% in April, after March's 1.1% increase.
The largest upward contribution in March came from transport and clothing prices, mainly due to base effects as petrol prices rose in March 2021 compared to a fall a year ago and clothing prices recovered as well. Base effects will boost inflation figures going forward. The BOE projects inflation to rise above the target by the end of 2021, but sees CPI at 2.0% in the medium-term.
The services PMI indicated another rise in output charges in April, although the growth rate of charged inflation eased slightly from March's 40-year high. Moreover, April's BRC shop price index expects prices to rise as global food and oil prices, along with shipping costs, shipping costs rose.
The UK Office for National Statistics will publish the latest data at 0600GMT Weds, May 19.
Source: Office for National Statistics
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.