Braced for a US-style inflation surprise

Since CPI inflation in the UK has recently been tracking CPI inflation in the US, we wouldn’t be surprised if this week’s inflation surprise in the US is followed by an upward surprise in the UK when January’s data are released on Wednesday. Our view that price and wage pressures will linger into 2023 explains why we think interest rates may rise from 0.50% now to a peak of 2.00% in this cycle.

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