The UK’s February Consumer Price Index (CPI) came in at 3.0% year-on-year, in line with expectations, while core CPI rose slightly to 3.2%, marginally above the forecast of 3.1%. Services inflation, a key concern for the Bank of England, eased slightly from 4.4% to 4.3% but remains stubbornly elevated. Analysts note that this data predates the spike in energy prices triggered by the US-Iran conflict, meaning the real inflation picture going forward could look significantly worse. Markets are now pricing in nearly three interest rate hikes by the Bank of England by year-end, with the odds of an April rate hike sitting at approximately 86%.
