UK Inflation remains high in second quarter of 2023

Key measures of price growth monitored by the Bank of England have failed to ease in July, despite a sharp drop in the headline inflation rate, the UK Office for National Statistics has said.

The annual consumer price inflation rate cooled to 6.8% from June’s 7.9%, the ONS added – as the central bank had predicted and moving further away from October’s peak of 11.1%.

The drop in the headline rate reflected falling energy prices and will be welcomed by British consumers who have faced higher inflation than in most other industrialised countries.

But fresh signs of stickiness in core inflation and consumer service prices echoed warnings by BoE policymakers this month that the risks of long-lasting high inflation were beginning to crystallise.

Core inflation, which excludes energy and food prices, remained at 6.9%, unchanged from June, and higher than expectations.

Services inflation, which mostly reflects home-grown inflation pressure from wages, rose to 7.4% from 7.2% – a little higher than the BoE had forecast.

However, the Pound Sterling rose slightly against the U.S. dollar on the back of the figures, which reinforced bets that the BoE will press on with its campaign of interest rate hikes.

Reuters/Hauwa Abu