July CPI data aligns with BoE expectations, easing services inflation but keeping pressure on policymakers amid energy price risks.
UK annual inflation accelerated to 2.9% in July from 2.6% in June, driven by a 13% increase in the OFGEM price cap and higher utility bills. The rise matched broad market expectations but slightly exceeded the Bank of England’s forecast of 2.8% for the month.
Services inflation eased to 3.4% from 3.6%, signaling a moderation in domestically generated price pressures. The BoE had projected a peak of 3.2% in the fourth quarter, suggesting the latest data remains within its anticipated range. Labour market figures showed mixed signals, with private sector wage growth slowing to 2.8% and PAYE employment falling by 13k.
The combined inflation and jobs data are unlikely to shift the BoE’s divided stance, with future policy moves dependent on energy price volatility linked to Middle East tensions.