First Insights: A second downside surprise for UK inflation

Research evidence excerpt

First Insights: A second downside surprise for UK inflation

Global Markets Research

17 June 2026First Insights

Economics - Global

Research Analysts

A second downside surprise for UK inflation European Economics

George Buckley - NIplc

• InflationsurprisedtheconsensusandtheBoEtothedownsidetoday,whiletheBoE’s george.buckley@nomura.com

coreservicepricemeasurehasbeenmorecomfortingoverthepastfewmonths. +44 (0) 20 7102 1800

Andrzej Szczepaniak - NIplc

• Still,thereis,tosomeextent,evidenceofongoingservicespricestickiness,which andrzej.szczepaniak@nomura.com

couldkeepthepressureontheBoE’shawkstovoteforratehikestomorrow.We +44 (0) 20 7102 3167

continuetoexpecta7-2voteforratesonhold. Josie Anderson - NIplc

josie.anderson@nomura.com

+44 (0) 20 7102 4284

A second below-consensus print

Global EconomicsFor the second month in a row UK headline CPI inflation has surprised consensus on the

David Seif - NSIdownside (though in line with our view), remaining at 2.8% y-o-y in today’s May print. Not

david.seif@nomura.comonly is that 0.4pp (to two decimal places) below the BoE’s 3.3% forecast (made in the April

+1 212 667 9180

forecast round), but the unchanged outcome relative to April compares with the BoE’s

0.2pp forecast rise between the two months. The Bank had expected services inflation to

be 3.9% y-o-y at this point, so 3.7% in May is a couple of tenths lower than that (though

the 0.5pp rise from 3.2% in April is in line with the Bank’s expected monthly pp change).

What can the details tell us?

So what can we say about today’s print? First off, the MPC’s preferred measure of

services inflation (which strips out volatile and non-market elements of services inflation –

see Figure 1) was stronger than it was in April, but at 3.2% annualised in the latest month