Breaking: UK annualized inflation rises by 9.1% in May vs. 9.1% expected
22.06.2022, 06:01

Breaking: UK annualized inflation rises by 9.1% in May vs. 9.1% expected

  • UK CPI rises by 9.1% YoY in May vs. 9.1% expected.
  • Monthly UK CPI arrives at 0.7% in May vs. 0.6% expected.
  • GBP/USD drops to daily lows at 1.2217 on mixed UK CPIs.

The UK Consumer Prices Index (CPI) 12-month rate came in at 9.1% in May when compared to 9.0% registered in April while matching estimates of a 9.1% print, the UK Office for National Statistics (ONS) reported on Wednesday. 

Meanwhile, the core inflation gauge (excluding volatile food and energy items) eased to 5.9% YoY last month versus 6.2% booked in April, missing the market forecast of 6.0%.

The monthly figures showed that the UK consumer prices arrived at 0.7% in May vs. 0.6% expectations and 2.5% previous.

FX implications:

In an initial reaction to the mixed UK CPI numbers, the GBP/USD pair fell further to hit a daily low at 1.2217.

The pair was last seen trading at 1.2233, down 0.32% on the day. US dollar rebounds amid broad risk-aversion.

Why UK inflation matters to traders?

The Bank of England is tasked with keeping inflation, as measured by the headline Consumer Price Index (CPI) at around 2%, giving the monthly release its importance. An increase in inflation implies a quicker and sooner increase of interest rates or the reduction of bond-buying by the BOE, which means squeezing the supply of pounds. Conversely, a drop in the pace of price rises indicates looser monetary policy. A higher-than-expected result tends to be GBP bullish.

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