July UK CPI data meets expectations but signals persistent inflation pressures, keeping Bank of England rate cut bets on hold.
UK headline inflation accelerated to 2.9% year-on-year in July, matching forecasts and up from 2.5% in June. Core CPI, excluding volatile items, held steady at 2.6%, defying expectations of a slowdown to 2.5%. Monthly headline CPI rose 0.35%, in line with estimates and above June’s 0.1% print.
The data suggests inflationary pressures remain elevated after a brief June slowdown, reinforcing concerns about sticky price growth. Markets currently expect the Bank of England to maintain current interest rates through year-end, though wage growth easing could influence future policy decisions.
The British Pound showed limited reaction, trading near session lows against the Japanese Yen at 215.70. Labour market data due later this week may provide further clarity on BoE policy expectations.