Breaking: UK annualized inflation jumps 9% in April vs. 9.1% expected

• UK CPI rises by 9% YoY in April vs. 9.1% expected.
• Monthly UK CPI arrives at 2.5% in April vs. 2.6% expected.
• GBP/USD drops sharply to 1.2475 on downbeat UK CPIs.

The UK Consumer Prices Index (CPI) 12-month rate came in at 9% in April when compared to 7.0% registered in March while missing estimates of a 9.1% score, the UK Office for National Statistics (ONS) reported on Wednesday. 

The annualized figure hit the highest since the modern series started in 1989.

Meanwhile, the core inflation gauge (excluding volatile food and energy items) rose by 6.2% YoY last month versus 5.7% booked in March, meeting the market forecast of 6.2%.

The monthly figures showed that the UK consumer prices arrived at 2.5% in April vs. 2.6% expectations and 1.1% prior.

Main points (via ONS):

“The largest upward contributions to the annual CPIH inflation rate in April 2022 came from housing and household services (2.76 percentage points, principally from electricity, gas and other fuels, and owner occupiers' housing costs) and transport (1.47 percentage points, principally from motor fuels and second-hand cars).”

“The largest upward contributions to the change in the CPIH 12-month inflation rate between March and April 2022 came from housing and household services (1.27 percentage points), restaurants and hotels (0.11 percentage points), and recreation and culture (0.10 percentage points), with the largest partially offsetting downward contribution from clothing and footwear (0.09 percentage points).”

FX implications:

In an initial reaction to the upbeat UK CPI numbers, the GBP/USD pair reversed course and fell sharply to near the 1.2475 region.

The pair was last seen trading at 1.2474, down 0.13% on the day. Sellers continue to lurk at the 1.2500 mark.