Bankinter : February’s CPI brings a surprise rebounding to +10.4% year-on-year from +10.1% foreseen vs +9.9% expected. Month-on-month is; +1.1% vs +0.6% expected and -0.6% foreseen. The core rate is also surprising, rebounding to +6.2% year-on-year from +5.8% previously and +5.7% foreseen. Month-on-month; +1.2% vs +0.8% expected and -0.9% previously.
Analysis team’s view: Negative news. This month’s reading disappoints and, far from easing, as has been the case for the last three months, it has picked up again. Moreover, inflation is showing signs of becoming more sticky and, therefore, more difficult to moderate with core inflation picking up again. The main contributors to inflationary pressures in the UK are Energy (+49.0% year-on-year ), Services (+6.6%) and Food (+18.0%). This puts pressure on the BoE in the day before the rate decision is released, which will take place today. After the inflation data, expectations of a +25bp rate hike increased to 100% versus 57% previously. Moreover, the market now expects another +25bp hike in May or June.