DAVY VIEW

This morning’s UK inflation result for February was always likely to be discounted by markets given it reflects the economy prior to the ongoing Middle East conflict. However, the details suggest that while the UK economy was still broadly on a disinflation path early in 2026, some aspects of higher consumer prices remain sticky. Services inflation in particular was above what the Bank of England (BoE) had expected in its latest projection last month. Nonetheless, a considerable decline is still likely from April when prior Budget measures fall out of the annual comparison.