Catherine Mann Says UK Inflation Data Encouraging but Underlying Pressures Persist

Bank of England policymaker Catherine Mann has described the latest UK inflation figures as encouraging while warning that underlying price pressures have not eased as much as officials would like to see.

Speaking in a recent podcast interview, Mann said the headline inflation numbers published this week were good but stressed that the broader picture remains mixed. Official data showed annual inflation falling to 3.0 percent, marking its lowest level since March last year and reinforcing expectations that price growth is gradually slowing.

However, Mann noted that measures beneath the surface, particularly in the services sector, continue to show resilience. Services inflation is often seen as a key indicator of domestic price pressures because it reflects wage growth and internal demand rather than global energy or commodity shifts. The persistence of these pressures suggests that the path back to the Bank’s 2 percent target may not be straightforward.

Mann also highlighted concerns about the labour market. She said the recent rise in the unemployment rate was very much a concern, indicating that policymakers are closely watching how economic cooling is affecting jobs and incomes. The Monetary Policy Committee must weigh the need to bring inflation sustainably back to target against the risk of weakening employment conditions too sharply.

The Bank of England has kept interest rates on hold in recent meetings after a prolonged tightening cycle aimed at curbing the surge in prices that followed the energy crisis and supply chain disruptions. In the latest vote, Mann joined the majority in opting to maintain current borrowing costs, though she suggested that discussions about future adjustments are becoming more finely balanced.

Financial markets are increasingly pricing in the possibility of a rate cut in the coming months, particularly if inflation continues to trend downward. Investors are also monitoring wage growth, consumer spending and business activity for clearer signals about the economy’s direction.

Mann cautioned that it is difficult to determine whether the expected drop in inflation toward 2 percent in the near term will prove sustainable. Temporary factors, such as base effects from previous energy spikes, can influence the headline rate without fully resolving structural price pressures.

The Bank’s challenge is to ensure that inflation expectations remain anchored while avoiding unnecessary strain on households and businesses. Mortgage holders and companies sensitive to borrowing costs are watching closely for any indication that the central bank is preparing to ease policy.

As policymakers prepare for their next meeting, the debate will likely focus on whether the improvement in headline data is strong enough to justify a shift in stance or whether further evidence of underlying moderation is required.