CPI increased by 0.4% m/m and 1.8% y/y in April which was somewhat above expectations. The main contribution came from the transport costs (air fares, sea fares and motor fuels). This was counteracted by an overall fall in food prices. The timing of Easter had an impact on the index, most notably for air fares and sea fares.
We don’t see that today’s figures will trigger an earlier rate hike by the BoE. Despite better growth prospects the below target inflation suggests that a rate hike is still remote and we expect the first rate hike in mid-2015.
Details, CPI Inflation April:
CPI, m/m: 0.4 % (consensus 0.3; prior 0.2)
CPI, y/y: 1.8% % y/y (consensus 1.7; prior 1.6)
Nordea