MNI UK Inflation and Labour Market Insight

For the full analysis click here.MNI UK Inflation Labour Insight - 2025_08_Release.pdf

• Headline CPI came in line with the BOE’s rounded forecast at 3.8%Y/Y and 7 hundredths above the BOE's unrounded forecast at 3.83%Y/Y.
• We think the marginal upside surprise to the Bank’s forecast was partly driven by food prices (which are still concerning) and partly by air fares (which are not).
• Consensus was also surprised to the upside to a larger extent by not fully taking into account the ONS’ methodology for energy bills.
• The big picture is that this data does not change the likely peak for CPI meaningfully.
• Labour market data were also a little on the stronger side with the employment level increasing by 238k (190k expected), payrolls coming in a little higher than expected (with upward revisions) and wage growth in line with consensus expectations.