Inflation data due at 7:00BST

• The Bank of England’s August MPR pencilled in a forecast for July headline CPI of 2.37%Y/Y, while the median of the previews that we have read comes in at 2.3%Y/Y (with a very small downward skew to 2.29%YY).
• The slightly lower consensus forecast is driven by a slightly lower services CPI forecast – with the Bank expecting 5.56%Y/Y but the median of the analyst previews we have read looking for 5.5% (with the mean at 5.47%Y/Y).
• In terms of services, there are three areas under the spotlight which could see notable moves: accommodation prices, rents and air fares.
  • Rents are in focus due to July being a month where social rental prices tend to be increased.
  • Air fares are generally expected to be softer – but this partly depends on the survey date.
  • Hotel prices surprised to the upside in the June data, but we note that there are very few hotels actually in the sample - so this could potentially partially reverse (it didn't appear to be Swift-driven though).
• Going into the print, markets price around a 31% probability of a September cut with 29bp priced by November (cumulatively) with 45bp priced by year-end and 107bp by June 2025. We think that there are two way risks to market pricing here.

For the full MNI Inflation Preview click here.