Shoppers walk along a high street in Rochester, England, on Tuesday, July 16, 2024.
Chris Ratcliffe | Bloomberg | Getty Images
Data released by the Office for National Statistics on Wednesday showed that UK inflation rose to 2.2% in July, slightly lower than expected but slightly above the Bank of England’s 2% target.
Economists polled by Reuters had expected the overall consumer price index (CPI) to be 2.3%.
Overall inflation was 2% in May and June, in line with the Bank of England’s target interest rate.
The Office for National Statistics attributed the growth to housing and household services and said gas and electricity prices fell less than a year ago.
The so-called core CPI, which excludes food, energy, alcohol and tobacco prices, was 3.3% in July, down from 3.5% in July, the Bureau said.
Meanwhile, inflation in the services sector, which the Bank of England monitors closely, fell to 5.2% in July from 5.7% the previous month.
Data released on Tuesday showed average salaries excluding bonuses rose 5.4% annually between April and June, the lowest level in two years. The unemployment rate fell to 4.2% during the same period, down from 4.4% from March to May.
The data comes after the Bank of England cut interest rates for the first time in more than four years earlier this month, taking the main bank rate to 5%. Since August 2023, the index has held at a 16-year high of 5.25%.
The Bank of England said in a statement monetary policy reportAlso released at the beginning of the month, CPI is expected to rise again in the second half of 2024.
Uncertainty remains over when the central bank will cut interest rates again and whether it will do so again this year. The Bank of England’s Monetary Policy Committee will hold three more meetings in 2024.
According to London Stock Exchange data, after the release of inflation data on Wednesday, the market expects the probability of the Bank of England to keep interest rates unchanged in September is about 55%, while the possibility of cutting interest rates next month has increased slightly. At the same time, expectations for a rate cut in November rose to over 90%.
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