Oil Prices Key to UK Inflation Path, Rabobank Warns

Rabobank’s research team identifies oil as the primary input for UK inflation and monetary policy. The Bank of England’s central scenario assumes Brent crude declines from $76 to around $71 per barrel, which would keep peak inflation near 3.2%.

Brent is already trading above those assumed levels, however, posing an upside risk to the inflation outlook. The divergence suggests that if oil stays elevated, price pressures may prove stickier than the BOE anticipates.