UK CPI Ofgem Caps Hawkish Expectations

April's UK CPI data saw headline inflation drop to 2.8%, suggesting that the Ofgem price cap is successfully containing energy-driven price persistence. TS Lombard believes markets are currently overpricing the likelihood of BoE interest rate hikes for the second half of the year.

Key Takeaways

• 1.April UK inflation data shows a significant deceleration, with headline CPI falling to 2.8% and services inflation dropping to 3.2%.
• 2.The Ofgem price cap is effectively smoothing the energy price shock, reducing the pressure on the BoE to respond to headline inflation spikes.
• 3.Market pricing for interest rate hikes in the second half of 2026 is likely excessive given fading persistence in the inflation basket.

Table of Contents

• UK CPI: OFGEM CAPS HAWKISH EXPECTATIONS
• Disclaimer

Document Preview

Page 1 of 4

Subscribe for full accessStart Free Trial