Greetings from Europe!

We had the US CPI report smack dab at our forecast yesterday again and based on public demand here is our UK preview for next Wednesday.

December inflation is typically fairly hot in core terms in the UK as especially services increase ahead of the holiday season. Services increased >0.8% MoM in December 2022, making it “easy” to deliver Services disinflation on a yearly basis in December 2023.

Services typically print 0.5-0.6%-points higher than in November in MoM terms, leaving a print around or slightly below 0.4% as the likely base case, with risks tilted to the downside based on recent services trends in Claimant count numbers and PMIs.

Clothing and Footwear and Recreation and Culture are destined to print substantially below 0% in tandem with recent seasonal patterns that have now returned both according to our price scrapping trends and according to most recent months of inflation being back in line with typical patterns.

Chart 1: MoM inflation in % in December in former years