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Analysts at TD Securities note that UK’s April inflation came in a tick lower than expected, with core inflation unchanged at 1.8% y/y, while headline inflation rose to 2.1% y/y.

Key Quotes

“The increase in headline inflation came on the back of higher household energy prices, as the government-set price cap was raised on April 1st; this is likely to unwind in October when the cap is again reviewed (an assumption the BoE is making as well).”

“The usually Easter-sensitive Package Holidays component was very weak, leading to a sharp decline in Recreation inflation. This component (which also includes the volatile Video Games category) is largely responsible for the downside miss in core this month.”

“The BoE won’t be too worried about today’s figures in light of ongoing political uncertainty. On that front, Theresa May will take questions for up to 3 hours from MPs this afternoon.”