The expectation is that we are not likely to see that happen though. While food prices do present considerable uncertainty coming into the June report, the main focus stays on services inflation for the most part. And for that, it is expected to ease further from 4.7% to 4.5% year-on-year.
So, that should reaffirm BOE rate cut expectations even if the headline and core figures should come in more or less the same as in May. Here are the overall estimates:
- Headline monthly inflation: 0.2% (prior 0.2%)
- Headline annual inflation: 3.4% (prior 3.4%)
- Core monthly inflation: 0.2% (prior 0.2%)
- Core annual inflation: 3.5% (prior 3.5%)
Just be wary that there’s also some debate on the index date that the ONS will be taking in calculating consumer prices for this month. The expected is cutoff is 10 June but if they do take 17 June, there could be upside risks to prices – particularly on the services side. That might stem from the likes of higher travel and accommodation prices in general ahead of the summer holidays.
As for the drop off in services prices as noted above, it is also in part due to Taylor Swift’s concerts in the UK in June last year. So, there is also some base effect tied to that.
Either way, the main figures are the thing to watch out for first before drilling down to services inflation and then food price inflation – which has been edging a little higher as of late.
If all of that falls in line, it will reaffirm a BOE rate cut for August
