Deutsche Bank: UK consumer prices less affected by Iran conflict than expected.

Sanjay Raja of Deutsche Bank stated in a report that, with the UK's May inflation rate lower than expected and remaining at 2.8%, the impact of the Iran conflict does not seem as significant as initially anticipated in the market. He said, "This may lead the Bank of England to hold steady and reflect. In fact, this could buy [policymakers] more time to assess the risks of so-called second-round effects." Raja noted that despite rising energy costs, retailers are still unwilling to reflect any expectations of cost pass-through. Additionally, with the backdrop of a preliminary agreement between the US and Iran, oil prices have dropped by around 10% compared to market expectations from last month. He mentioned that by October 2026, the price cap regulated by Ofgem may decrease rather than increase, providing much-needed relief for households and businesses in the UK.