DAVY VIEW

This morning’s UK CPI release shows inflation rising to a 40-year high of 9% in April. Although the out-turn is in line with expectations, the UK now has the sharpest CPI inflation rate in the G7. Core inflation at 6.2% is now substantially above the euro area at 3.5%. Brexit has no doubt contributed to the exceptional cost pressures and labour shortages hitting the economy. The May consensus forecast is for just 1% UK GDP growth in 2023, accompanied by 4.3% CPI inflation — the clear underperformer amongst the G7.