Inflation in the United Kingdom rose to 2.2% in July, as per the latest data released by the Office for National Statistics (ONS).
While the figure is below the less-than-expected figure of 2.3% as forecasted in a Reuters poll of economists, it is still above the Bank of England’s target of 2%.
The Consumer Prices Index (CPI) in the U.K. rose by 2.2% year-over-year (YoY) in July, a rise from the CPI of 2% in June.
- While housing and household services contributed to the rise of CPI, the downward contribution came from restaurants and hotels.
- Core CPI, excluding energy, food, alcohol, and tobacco, rose by 3.3% YoY in July, down from 3.5% in June.
- Services inflation fell from 5.7% in June to 5.1% in July.
As the ONS released the July inflation data, Sterling slipped 0.19% to $1.2841.
CPI rose by 2.3% YoY in April, 2% YoY in May, and 2% YoY in June.
The ONS recently released the U.K. unemployment report also which highlighted that unemployment rate in the country has slipped to 4.2% during the last quarter, i.e. April-June from 4.4% during the preceding quarter, i.e. January-March.
During April-June, average pay excluding bonuses grew by 5.4% YoY, the lowest rate in two years.
Early this month, the Bank of England cut the base interest rate from 5.25% to 5%, the first rate cut since March 2020.
The Bank expected inflation to slightly rise in the coming months due to wage increases, service prices, and still-tight labor market conditions.
There is a lot of uncertainty over whether the central bank will even make another cut this year.
U.S. Inflation Slips to 2.9% in July
As per the latest data from Bureau of Labour Statistics (BLS), the CPI in the United States rose by 2.9% YoY in July as compared to 3% YoY in June.
Prices rose 0.2% in July after reporting a decline of 0.1% in June.
Core CPI, excluding volatile foods and energy, rose by 3.2% YoY in July, as compared to 3.3% YoY in June.
Reuters poll of economists had forecast the CPI increasing 0.2% on the monthly basis and 3% YoY in July.
The U.S. Dollar index fell 0.05% to close at 102.5 on 13 August ahead of the release of inflation data.
The latest data raises the chances of the Federal Reserve cutting interest rates next month in September as inflation seems to be cooling down.
The Fed has held interest rates at a 23-year high of 5.25%-5.5% for over a year.
The central bank also bears the responsibility of allaying the global fear of recession in the U.S., sparked by rising unemployment rates in the country.
