MNI UK Inflation and Labour Market Insight: February 2026

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• Labour market data showed wage growth exactly in line with BOE and consensus forecasts while the unemployment rate came in higher than expected.
• Inflation data was in line with market expectations (but 0.11ppt above BOE staff forecasts) while services CPI was higher than both the MNI median and BOE staff forecasts.
• We look at the details behind the moves and note that 0.14ppt of the upside CPI surprise (more than the entire BOE surprise) was down to categories that could partially or potentially even entirely reverse in the February data.
• We think the big picture is that the labour market data was close enough to expectations that the probability of a March cut increased but we don’t think the January inflation data should have impacted expectations so much.