22 April 2026
If you are covering UK inflation figures, please see the following comment from Lindsay James, investment strategist at Quilter:
"This morning’s inflation data showed CPI creeping back up to 3.3%, confirming that price pressures are re‑accelerating rather than fading away since the outbreak of the war in Iran. Markets had already moved to price in a quarter‑point Bank of England rate hike by the end of the summer but this data could add to pressure on the MPC to act.
"A rise in rates risks misdiagnosing the problem. This inflationary pulse is being driven by supply disruption, not excess demand. Higher interest rates will do nothing to increase the flow of oil or other goods from the Middle East. Financial markets are behaving as though the conflict is effectively over, with equity markets largely recovered and oil prices for future delivery falling from around $95 for June contracts to closer to $80 by year end. The physical market tells a very different story. Prices for immediate delivery into Europe are trading roughly $28 above benchmark levels, reflecting transport disruption rather than longer‑term demand.
"Even if the conflict were to end quickly, today’s data underline that an inflationary effect already feeding through the economy and will continue to do so over the coming months. A rapid reopening of the Strait could allow current rate‑hike expectations to unwind, but whether this becomes something more persistent, and harder for markets to look through, depends entirely on how long supply chains remain impaired.
"The problem is that this inflation shock is landing as the domestic economy is weakening. Recent labour market data show payrolled employment falling, inactivity rising and wage growth easing. Rising prices alongside weakening earnings growth is a clear recipe for declining real purchasing power.
"A swift resolution to the conflict must be the priority, but today’s inflation numbers also highlight how little has changed since the last energy crisis. Greater energy self‑reliance remains essential, including increased production, generation and storage.
"In the short term, China’s decision to restart coal‑fired power generation has helped ease pressure by freeing up LNG cargoes for Europe. UK gas prices have fallen by around a third from their March peak, but they remain well above pre‑conflict levels, underlining how exposed the economy still is to decisions taken elsewhere."
