22 May 2025
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UK inflation sees sharp rise in April

Daily Outlook 22 May 2025

By Jeanne Walters

UK CPI inflation jumped sharply in April, rising to 3.5% y/y from 2.6% the month prior. Although a rise in inflation had been widely anticipated due to increases in several administered prices (including a 6.4% rise in the energy cap), the outturn was above expectations suggesting the potential for more persistent upward price pressure. Core CPI rose 3.8% y/y in April, up from a 3.4% rise in March, while services inflation picked up to 5.4% from 4.7%. On a month-on-month basis prices rose 1.2%.

A report produced by EZDubai, in collaboration with Euromonitor International, suggests that the MENA region’s e-commerce market grew 13% in 2024, to reach AED126.7bn. The UAE accounted for AED32.3bn of the total, with the top three spend categories including apparel and footwear, consumer electronics and home care. UAE e-commerce spending is to rise to over AED50bn by 2029.

The Jibun Bank Japan composite PMI fell into contractionary territory in the May flash estimate, declining to a value of 49.8 from 51.2 in April. The fall was largely driven by a decline in the services sub-component, which fell to 50.8 in May from 52.4. The manufacturing component remained below the neutral-50 mark but did improve to a value of 49.0 from 48.7 in April.

Today’s Economic Data and Events

  • 12:00 GE IFO business confidence (May): forecast 87.3
  • 12:00 EC HCOB Composite PMI (May P): forecast 50.6
  • 12:30 UK S&P Global Composite PMI (May P): forecast 49.3
  • 16:30 US Initial jobless claims (w/e May 17); forecast 230k
  • 17:45 US S&P Global Composite PMI (May P): forecast 50.3

Fixed Income

  • US Treasury yields were higher on Wednesday after an auction of 20yr bonds saw weak demand, with investors concerned about the tax and spending bill currently under negotiation. The 2yr UST gained 5bps to reach 4.0194%, the 10yr yield gained 11bps to 4.5985%, and the 30y yield climbed by over 12 bps to 5.0923%.
  • Major European bond yields also rose on Wednesday. The 10yr Gilt yield gained 5bps to 4.7558%, while the 10yr Bund yield rose by 4bps to 2.644%.

FX

  • The dollar spot index saw a third consecutive day of declines, dropping 0.56% on Wednesday amid concerns about demand for US debt. EURUSD rose 0.4% to 1.1331, and GBPUSD gained 0.2% to 1.342. USDJPY fell 0.57% to 143.68.
  • Commodity currencies were stronger against the dollar on the day. AUDUSD rose 0.18% to 0.6436, while NZDUSD gained 0.22% to 0.5939. USDCAD fell 0.4% to 1.386.

Equities

  • US equity markets fell sharply on Wednesday, following the 20yr auction. The Dow Jones fell 1.9%, the S&P 500 declined 1.6% and the NASDAQ dropped 1.4%.
  • European equity markets were more mixed on the day, as markets waited for a revised US-EU trade proposal. The FTSE 100 increased marginally, adding just 0.06%, the CAC 40 fell 0.4% and the DAX rose 0.4%.
  • Local markets moved lower on the day, with the DFM down 0.5% and the ADX 0.6% weaker. The Saudi Tadawul declined by 1.8%.

Commodities

  • Oil prices declined again on Wednesday. Brent futures fell 0.7% to reach USD 64.91/b, while WTI declined by 1.6% to USD 61.57/b. The EIA reported a rise in US crude inventories of 1.33m barrels last week.

Written By

Jeanne Walters Senior Economist


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