Inflation in the U.K. accelerated to a four-month high
Consumer prices in the United Kingdom rose 2.9% year-over-year in July, according to the country's Office for National Statistics. This is the highest rate in four months, the BBC notes.
Price growth accelerated compared with June, when it stood at 2.6% year-over-year—which, in contrast, marked a 15-month low. The rise in inflation in July was in line with the average expectations of economists surveyed by Bloomberg. The Bank of England had forecast a rise to 2.8%.
The main reason was a 13% increase in the cap on electricity rates for households. Lower prices for automotive fuel only partially offset this increase, Bloomberg notes. Inflation in the services sector—an indicator of domestic price pressures closely monitored by the Bank of England—fell, however, from 3.6% to 3.4%. Core inflation, which excludes energy, food, alcohol, and tobacco prices, remained at 2.6%.
Following the release of the data, the British pound held its ground, rising 0.1% to $1.3541. Futures on U.K. government bonds suggest that yields will decline slightly at the opening of trading, according to Bloomberg.
Context
New Prime Minister Andrew Burnham has made tackling the rising cost of living a top priority during his first month in office, according to Bloomberg. Burnham has implemented several targeted measures—ranging from capping bus fares to reducing the VAT on electricity bills, the agency noted.
In the eurozone, inflation accelerated to 2.9% in July from 2.8% in June due to the breakdown of the U.S.-Iran ceasefire and the resulting rise in oil prices — energy prices in the bloc jumped by 10%. Inflation also accelerated in the services sector.
This article was AI-translated and verified by a human editor
