Sticky inflation’s not just a US problem.

Services sector price growth in the UK remained irksome in March, ONS data released on Wednesday showed.

At 6%, services inflation ran above the BoE’s last projection, frustrating calls for as many as three rate cuts in 2024. Those wagers were trimmed further on Wednesday.

Headline and core price growth ran 3.2% and 4.2%, respectively, in March, both ahead of estimates.

You can’t cut rates aggressively with inflation running triple target for services in an advanced economy. Well, you can, but at considerable risk. That risk’s amplified by the UK’s demonstrated vulnerability to supply shock-induced goods inflation.

Central banks continue to claim there’s no evidence of a wage-price spiral in the developed world. Or that if there is evidence, it’s best described as scant. While I understand the utility of pushing that line, it’s insincere on honest days and mendacious on all the others.

Data released earlier this week showed the unemployment rate in the UK rose to a six-month high in the three months to February, but pay growth was basically unchanged from the prior period at 6%.

So, pay growth’s stubborn at 6% and services inflation’s sticky at the same 6%. You reckon that’s a coincidence? (Don’t answer that. It’s a trick question.)

If Tuesday’s firm read on pay dashed any remaining chance of a May rate cut from the BoE, Wednesday’s bothersome services inflation print might’ve nixed August, or at least materially reduced the odds of a move before September.

In a rather transparent display, Jeremy Hunt this week suggested Rishi Sunak will be ready to call for elections as soon as Andrew Bailey’s ready to cut rates. “The feel-good factor as interest rates start to come down will be stronger in people’s minds come early autumn,” Hunt told Bloomberg.

Sorry, Rishi, but the “feel-good” factor from the BoE’s first rate cut won’t cut it. It’ll be two years since Liz Truss’s ill-fated, short-lived stint as prime minister come September. But for a lot of voters, it’ll feel like two weeks. The Truss debacle left an indelible mark on conservatives.

There’s also the “small” matter of a policy divergence with the Fed, which could, under the right (or wrong, depending on how you want to look at it) circumstances, increase the odds of rekindled inflation through the FX channel contingent on commodity prices.

In remarks for an IMF event this week, Bailey indicated he’s not too concerned about that.

“The dynamics of inflation are rather different between [the UK] and the US,” he said, adding that US inflation’s more “demand-led.” Suffice to say the ONS read on services inflation, released just hours later, begged to differ.

In the same interview with Bloomberg, Hunt said Sunak’s “strongest argument” to UK voters is that the country’s “turned that corner.” I’m not sure what corner he meant but, again, it doesn’t matter. The Tories are 26ppt behind Labour in national polling. 26ppt. On the eve of Truss’s 49-day “reign,” that margin was just 8ppt.