Inflation comment

William Marshall, Chief Investment Officer, comments on the UK inflation rate that was announced on 21 May 2025.

William Marshall

21 May 2025

Skyscraper neighbourhood at night.

Commenting on the UK inflation rate announced today, William Marshall, Chief Investment Officer – Hymans Robertson Investment Services (HRIS) says:

“A large jump in inflation was mostly expected this morning. This is because a lot of indexed or government-set price increases, such as water bills, were predetermined.

However, the 0.9% increase in the CPI was 0.2% ahead of what most economists forecasted, and 0.1% higher than the Bank of England expected. Some of the overshoot has come from the timing of Easter, as travel costs significantly increased, which may partly wash through next month.

Interestingly, the inflation data comes the day after the BoE’s Chief Economist, Huw Pill, stated that they are cutting interest rates too quickly – he recently voted to hold rates level during the BoE’s decision to cut earlier this month.

The BoE has already been cutting at a gradual pace of once a quarter. We expect them to continue on this pace, but this data point may concern a few more Monetary Policy Committee members. Consequently, there is a greater chance they skip an extra meeting before cutting again in September.”