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Rabobank warns UK inflation risks to rebase above 3% after CPI drop

Rabobank says renewed energy price shocks, including higher crude oil after developments involving the US-Iran ceasefire and shipping disruptions, could push UK inflation back above 3% after June’s 2.6% print.

Reported · Written up by our desk · Central Banks

Rabobank strategist Stefan Koopman said the UK’s June CPI decline to 2.6% year over year undershot the Bank of England’s Monetary Policy Committee forecast, with downside surprises spanning food, core goods and services.

In Rabobank’s view, easing domestic pressures may be offset by renewed energy shocks, which the firm expects to lift inflation back above 3% soon. Koopman noted food price inflation slowed to 1.7% year over year and that the overall June reading was the lowest in 15 months, but argued 3% could become the UK’s de facto inflation norm over coming quarters.

Koopman pointed to energy-market drivers including crude oil gains tied to the collapse of the US-Iran ceasefire, renewed disruption to shipping through the Strait of Hormuz, and Ukrainian attacks that have pressured Russian refining capacity and tightened global diesel and refined-product markets.

He added that persistent elevated energy prices increase the risk of second-round effects in prices and wage-setting, and said the MPC is likely to revisit its energy assumptions, potentially adding more “noise than signal” for markets if multiple scenarios are presented. FXStreet attributed the analysis to Rabobank.

Latest closeWTI crude $92.23 ▲6.2%

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