Summary

• The UK is the latest country to experience remarkably benign food inflation in May, despite the Middle East crisis which threatens to push up costs later this year.
• If energy prices stay where they are, we're likely to see inflation peak around 3.5% in September.
• We don't think that meets the bar for rate hikes.

By James Smith, Developed Markets Economist, UK

May’s lower-than-expected UK inflation figures are the latest data point questioning the need for rate hikes. We see inflation peaking around 3.5% in September on current energy prices. That’s unlikely to