UK: Downside surprise in inflation – TDS

Analysts at TD Securities note that UK’s June inflation surprised to the downside today, with headline inflation at 2.4% y/y and core inflation at 1.9% (both 0.2ppt below consensus).

Key Quotes

“Looking at the details, however, the downside surprise shouldn't derail the expected BoE hike next month as it's more a matter of steeper discounting in a couple of categories (computer games and clothing) rather than a broad-based deceleration.”

“Overnight drama in the House of Commons saw the government survive by just 6 votes a customs union amendment to the Trade Bill. Monday and Tuesday's votes have shown that parliament now has a working majority for a harder Brexit, and no majority for a customs union.”