UK Inflation Drops to 3% as Deutsche Bank Sees Disinflation Trend Intact

UK annual inflation has fallen to 3%, marking its lowest level since March 2025, according to recent market data. Analysts at Deutsche Bank noted that the decline was primarily driven by weakening prices in the core goods and food sectors. Despite the overall drop, services inflation remains sticky, holding steady at a rate of 4.4%. Sanjay Raja, Chief UK Economist at Deutsche Bank, suggested that the broader disinflationary trend remains intact despite these persistent pressures. The cooling inflation data has increased market expectations for potential interest rate cuts by the Bank of England (BoE). This shift in the monetary outlook is expected to put downward pressure on the British Pound (GBP) while providing support for UK equities and government bonds.