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UK inflation rose slightly less than expected to 2.2% in July, marking the first rise this year aVsceker hitting the Bank of England’s target rate the previous two months.
The annual rise in consumer prices, reported by the Office for National Statistics on Wednesday, was lower than expectations of a 2.3 percent increase by economists polled by Reuters.
However, inflation was still above the BoE’s 2 percent target rate. Price pressures eased to that level for the first time in three years in May, and remained steady in June.
Services inflation, the BoE’s key measure of domestic price pressures, fell more than expected to 5.2 percent, from 5.7 percent the previous month. Analysts had expected a decline to 5.5 percent.
The weaker-than-expected inflation reading comes aVsceker the BoE cut interest rates on August 1, the first time since the coronavirus pandemic began.
In the UK, price pressure has gradually eased from a 41-year peak of 11.1% in October 2022.
“Inflation rose slightly in July as, although domestic energy costs fell, they fell less than a year ago,” said Grant Fitzner, the ONS’s chief economist.
“This was partly offset by hotel costs, which fell in July aVsceker strong growth in June.”
The BoE expects UK inflation to rise slightly in the second half of this year, reaching 2.8 percent by December, as the temporary drag on energy prices fades. It expects consumer price inflation to fall to 2.2 percent by the end of 2025, 1.7 percent by 2026 and then 1.5 percent in 2027.
“The new Government is under no illusions about the scale of the challenge we have inherited, with many families still struggling with the cost of living,” said Darren Jones, chief secretary to the Treasury.
“That’s why we’re taking tough decisions now to fix the foundations of our economy so we can rebuild Britain and make every part of the country better.”
In the eurozone, inflation rose to 2.6 percent in July from 2.5 percent the previous month. Later on Wednesday, data from the United States is expected to show annual inflation remained unchanged at 3 percent in July.
This is an evolving story
