According to new figures from the Office for National Statistics (ONS), inflation has risen above the Bank of England’s 2% target. The Consumer Prices Index (CPI) indicated an annualized inflation rate of 2.2% in July, surpassing the 2% reported in June but below the forecasted 2.3%. The main contributors to this increase were housing and household services, where prices of gas and electricity decreased at a slower rate compared to last year. On the other hand, prices in restaurants and hotels experienced a decline, with hotel prices dropping from the previous year.
Core inflation, which excludes volatile elements like energy and food, increased by 3.3% in the 12 months leading up to July 2024, down from the June figure of 3.5%. Additionally, inflation in the services sector dropped from 5.7% to 5.2% during the same period.
In response to the data, Martin Sartorius, Principal Economist at CBI, stated, “Inflation falling below the Bank of England’s expectations is a positive indication that price pressures are returning to normal levels for households and businesses.” However, he emphasized that a second consecutive interest rate cut next month is not guaranteed due to potential inflation risks, particularly with high pay growth persisting.
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