JP Morgan AM: Headline inflation should decelerate from next month
JP Morgan AM: Headline inflation should decelerate from next month
The UK inflation print surprised to the upside last week, with headline CPI remaining in double digits at 10.1% year on year in March.
While the UK arguably has a stickier inflation problem than the eurozone and the United States, headline inflation should decelerate from next month.
The contribution to year on year inflation from electricity and gas prices should moderate sharply from April 2023 onwards due to favourable base effects.
These base effects should take around 2%pts off the headline figure. However, core inflation is unlikely to weaken as quickly, as wages continue to put upward pressure on costs and prices.
The Bank of England will want to see wage pressures moderate before it can be confident that its job is done.
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