UK inflation - view from Patrick O'Donnell - Chief Investment Strategist

Following yesterday's inflation announcement, Chief Investment Strategist Patrick O'Donnell also shared his insights. Read his comments here.

UK's annual inflation rate came in above analyst expectations, rising to 3.5% in April. The big surprise was in Services inflation, which came in at 5.4%, relative to consensus forecasts of 4.8%. The drivers of this were a mix of seasonal factors and price resets; excluding volatile items, Services inflation increased at a slower pace than last month.

Whilst the BoE is likely to look through many of the price resets and one-offs, at their recent meeting, they highlighted that they are still in a gradual and cautious rate-cutting cycle, with this data supportive of that stance.