Investment Insights

Inflation Shocker

  • Mar 22, 2023
  • Craig Farley

A hot UK inflation print this morning has jolted markets, triggering a swift repricing of the odds of an interest rate hike at tomorrow’s Monetary Policy Committee (MPC) meeting.

The Consumer Prices Index (CPI) unexpectedly accelerated to 10.4% YoY in February from 10.1% YoY the previous month, surpassing all economists’ forecasts who had projected a return to single digits.

  • Food and non-alcoholic drink prices soared at 18% YoY, the fastest pace since 1977.
  • Clothing and footwear rose 8.1% YoY.


Of greater concern for policymakers will be the breadth of price rises.

Core inflation, excluding volatile food and energy prices, reaccelerated to 6.2% YoY from 5.8% in January.

Services inflation, a measure watched carefully by the Bank of England for signs of potential wage pressures, jumped to 6.6% YoY from 6% YoY in January.

Odds of a 25-basis point increase tomorrow have moved from a coin-flip (50/50%) last night to near-certainty (96%) at the time of writing:


This latest data dump renders Britain the sole Group of Seven nation with inflation stuck at double-digit levels, and with growth also acutely below pre-pandemic trend.

The MPC’s balancing act between weighing acute and persistent price pressures against the squeeze being felt by businesses and households has just become more precarious.

TEAM Asset Management is a trading name of Theta Enhanced Asset Management Limited which is regulated by the Jersey Financial Services Commission.