First Insights

Research evidence excerpt

First Insights

Global Markets Research

22 July 2026First Insights

Economics - Global

Research Analysts

UK inflation falls, but core resists European Economics

George Buckley - NIplc

• WhileUKheadlineinflationfellby0.2ppbetweenMayandJune,astheBoEhad george.buckley@nomura.com

expected,coreandservicesinflationprovedmoreresilientthantheconsensusview. +44 (0) 20 7102 1800

Thiscanbeexplainedbylowerfoodpricespullingdownonheadlineinflation(butnot Andrzej Szczepaniak - NIplc

coreorservices),butatthesametimetwocomponents–informationprocessing andrzej.szczepaniak@nomura.com

equipmentandhotel/cateringprices–supportingcoreinflation. +44 (0) 20 7102 3167

Josie Anderson - NIplc

• Itremainstobeseenwhetherthesemoves,especiallyinhotel/cateringprices,arethe josie.anderson@nomura.com

resultofunderlyingstrengthinthesector(lastweek’sGDPreleasesuggests +44 (0) 20 7102 4284

otherwise),thepass-throughofhigheroilpricesorsimplychangingseasonal

patterns.Whateverthecase,theBoEisunlikelytobeunnervedbythesefigures,

bearinginmindtherelativelylimitednumberofcomponentsthatpreventedthefallin

coreinflationthistime.Thesurgeinupstreamservicepriceswasalsofocusedona

singleelement–transport/storage–whichcouldbelargelyenergy-related.

Headline inflation falls, but core and services more resilient

This morning's UK June inflation numbers were all above our forecasts, but the headline

rate fell 0.2pp to 2.6% – which was below consensus. The Bank of England had also been

forecasting a 0.2pp fall in CPI inflation between May and June (in its April MPR), albeit at

a higher level of inflation (recall the previous two months surprised on the downside).

Services inflation only fell a tenth, to 3.6%, versus consensus forecasts of a 0.2pp drop

and our view of a 0.3pp fall.