UK CPI rose to 2.9% in July, with core inflation steady, but energy and services pressures may push prices higher soon.
UK inflation climbed to 2.9% year-over-year in July, up from 2.6% in June, matching expectations. Core CPI remained unchanged at 2.6%, while services inflation eased slightly to 3.4% from 3.6% in June. Energy price increases, driven by the Ofgem Price Cap, and base effects contributed to the rise.
Food price inflation dropped to its lowest level since late 2021, and core goods pricing stayed subdued due to summer discounting. However, risks remain tilted upward, with energy prices expected to rise further and services inflation likely to edge higher. Deutsche Bank forecasts CPI peaking near 3% later this year.
The Bank of England’s core services measures ticked up, adding complexity to the Monetary Policy Committee’s decision-making. Persistent inflation risks could influence future rate decisions.