The British pound slipped after the UK CPI report (see economic calendar below) missed estimates on both headline and core inflation respectively falling from 30-year highs. The key focus was the core inflation print (6.9%) that could indicate a possible peak in the inflation cycle and the impact of the aggressive monetary policy adopted by the Bank of England (BoE). As welcome sign for many UK consumers are the reduction in PPI data which could indicate further decline in inflationary pressures to come.
Breaking down the inflation basket, several items remain sticky including alcohol and tobacco, clothing and footwear, Housing and household services of which owner occupiers’ housing costs and communication which all pushed higher on a YoY basis. The decline in transport and fuels was probably the most noteworthy with fuel prices falling by 22.7% in 2023 (up until June) with the transports segment retracting 1.7% relative to the 1.3% in May 2023.
