UK CPI data in August:
- CPI YoY Actual 6.7% (Forecast 7%, Previous 6.8%)
- Core CPI YoY Actual 6.2% (Forecast 6.8%, Previous 6.9%)
In August, the observed inflation rate was softer than expected across all metrics, with the headline inflation increasing by a mere 0.3% m/m compared to the anticipated 0.7% m/m, a development that has had adverse effects on the pound and bond yields following the announcement. A significant drop in food prices is the chief contributor to the decline in core prices, which in turn is expected to encourage the Bank of England (BOE) to increase the rates one last time before taking a longer break. This movement in food prices is viewed as positive news for the BOE, providing a substantial reason to support a forthcoming pause after tomorrow potential rate hike.

Source: xStation 5
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