| Time | Country | Event | Period | Previous value | Forecast | Actual |
|---|
| 07:00 | United Kingdom | HICP ex EFAT, Y/Y | December | 5.1% | 4.9% | 5.1% |
| 07:00 | United Kingdom | HICP, Y/Y | December | 3.9% | 3.8% | 4% |
| 07:00 | United Kingdom | HICP, m/m | December | -0.2% | 0.2% | 0.4% |
| 10:00 | Eurozone | Harmonized CPI, Y/Y | December | 2.4% | 2.9% | 2.9% |
| 10:00 | Eurozone | Harmonized CPI ex EFAT, Y/Y | December | 3.6% | 3.4% | 3.4% |
GBP strengthened against other major currencies in the European session on Wednesday as the data showed a surprise acceleration in the UK’s annual inflation in December, prompting investors to trim their expectations of policy easing by the Bank of England (BoE) this year.
The Office for National Statistics (ONS) announced this morning that the consumer price index (CPI) increased by 4.0% YoY in December 2023. This marked the first acceleration in annual consumer-price growth since February 2023, and surprised economists who had anticipated the inflation rate would moderate to 3.8% YoY from 3.9% YoY in November. The rebound was mainly driven by price increases for alcohol and tobacco (+12.9% YoY) in response to a rise in tobacco duty. Meanwhile, the core CPI rose 5.1% YoY in December, the same pace as in the previous month. Economists had forecast a gain of 4.9% YoY.
The hotter-than-expected December inflation data caused a repricing of the bets on BoE interest rate reductions this year. According to Bloomberg, markets are now foreseeing four 25-basis-point rate cuts from the BoE and about a 65% probability of the fifth one in 2024. Yesterday, they fully priced five rate decreases.