DAVY VIEW

April’s inflation fell to 2.8%, below consensus and matching our forecast. Core inflation also declined to 2.5%, with services inflation down to 3.2%. The results follow yesterday’s (May 19th) dovish surprises to UK labour market data, and there has been a subsequent softening of market pricing for increases to Bank Rate this summer. This is all closely aligned to our expectations as set out earlier this month in our UK economy insights report, ‘Escaping two lost decades’, May 6th 2026.