UK inflation rate in July 2024

UK inflation rose to 2.2% in July, slightly below expectations but slightly above the Bank of England’s 2% target. data Data released by the UK Office for National Statistics on Wednesday showed.

Economists polled by Reuters had expected the headline consumer price index (CPI) to come in at 2.3%.

The overall inflation rate in May was 2%. and Junein line with the Bank of England’s target interest rate.

The ONS attributed the price rise to housing and domestic services, and said gas and electricity prices fell less than a year earlier.

The statistics agency said the core CPI, which excludes food, energy, alcohol and tobacco prices, was 3.3% in July, down from 3.5% in July.

Meanwhile, inflation in the services sector, which the Bank of England watches closely, fell to 5.2% in July from 5.7% the previous month.

GBP It retreated after the data was released and was last trading at $1.2831 at 9:09 a.m. London time.

Data released on Tuesday showed average wages excluding bonuses rose 5.4% in the April-June period from a year earlier, the slowest pace in two years. The unemployment rate fell to 4.2% from 4.4% in the March-May period.

These data were released by the Bank of England earlier this month. First rate cut in more than four yearsraising the main bank rate to 5%. Since August 2023, the rate has remained at a 16-year high of 5.25%.

The Bank of England said in its report Monetary Policy ReportThe report, also released earlier this month, said CPI is expected to rise again in the second half of 2024.

There is still uncertainty about when the central bank will cut interest rates again, and whether it will do so again this year. The Bank of England’s Monetary Policy Committee is expected to meet three more times in 2024.

George Boubouras, managing director at K2 Asset Management, told CNBC’s “Squawk Box Europe” that the Bank of England has plenty of reasons to keep cutting rates.

“But don’t be too aggressive. Just shallow and sustained easing because the services component in the UK, like the services component in other developed countries, is very stubborn,” he said, adding that it could take “years” for services inflation to ease.

Data from the London Stock Exchange showed that after the release of inflation data on Wednesday, the market expected the Bank of England to keep interest rates unchanged in September at about 55%, while the probability of a rate cut next month rose slightly. At the same time, expectations for a rate cut in November rose to more than 90%.

Deutsche Bank’s chief UK economist Sanjay Raja said the next round of inflation and labor market data would be key, but a rate cut in September was also possible.

“The next round of inflation and labour market data will be critical in determining whether the MPC can push ahead with a rate cut in September. While this is not our base case, the odds of successive rate cuts are rising,” he said.

“A rate cut in September is no longer out of the question. It is entirely possible that we could see multiple more rate cuts this year,” Raja added.