UK CPI is expected to ease in June, with headline inflation forecast at 2.7% year-on-year versus a 2.7% market view, a 3.1% Bank of England projection and 2.8% previously. Services inflation is still seen as firm at 3.6% against 3.5% in the market and 3.6% at the BoE, down from 3.7%, while core CPI is put at 2.6% in line with consensus as core goods offer little movement.
Energy and Fuel Dynamics
With no Ofgem adjustment to electricity and gas prices in June, fuel is the main driver, and petrol costs are expected to fall month-on-month even as fuel inflation stays high at 21.3% year-on-year. Including power and gas, energy inflation is forecast to rise to 5.9%.
Risks and Market Uncertainty
The ONS price-collection date adds uncertainty: if airfares print lower, services could drop to 3.5% and core to 2.5%. Risks then turn to further pass-through from Ofgem’s July price cap change and potential second-round wage effects, which would feed into Bank Rate considerations.
