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Inflation data due at 7:00GMT

UK DATA
  • Inflation is expected to continue to slowly edge lower in the January data, driven by falling petrol prices.
  • The Bloomberg survey sees CPI falling by -0.4% m/m (vs +0.4% in Dec), cooling by 0.2pp to +10.3% y/y on the headline. This remains only 0.8pp below the October high, in part due to sticky energy prices enforced by energy price caps.
  • A 0.1pp tick down on core CPI to +6.2% y/y is pencilled in as demand softens.
  • New 2023 weightings add uncertainty to the January prints, whereby services and energy are likely to be see heavier weightings.
  • Core CPI will remain in focus, particularly after yesterday's upward surprise to regular wage data. Markets price in 29bp for February (up from 24bp ahead of the inflation data), 47bp by March (up from 40bp) and a terminal 68bp by September (up from 55bp in June).

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