Consumer Prices (Jan.)

The unexpectedly large jump in headline consumer price inflation in January to 6.5% y/y is a clear challenge to our view that the hiking cycle is at an end. Further signs of the economy coming off the boil and a drop in household inflation expectations means we aren’t throwing in the towel just yet, but a similarly high headline inflation number in February would probably seal the deal on another rate rise in the MPC’s next meeting in April.