UK inflation jumped above the Bank of England’s two per cent target after two months of being back on track, rising to 2.2 per cent in July.
Figures released this morning by the Office for National Statistics (ONS) showed that prices rose less than had been expected than the City, but still above where the UK’s central bank aims for inflation to be.
This was the first rise in the consumer price index since December 2023, as inflation has steady fallen over the last couple of years, with occasional unexpected ticks up.
Economists had expected inflation to rise to 2.3 per cent in July, partly due to fast-rising prices in airline flights, package holidays, and hotels.
The ONS said that the largest upward contributions acctually came from housing and household services, as the price of gas and electricity remained at elevated levels, falling less than they had last year.
In a surprise move, the largest downward contribution actually came from restaurants and hotels.
July’s inflation data comes within a raft of economic figures released this week that will provide key indicators for the Bank of England over whether to pursue a September interest rate cut.
Yesterday, the ONS reported that UK unemployment had fallen unexpectedly in the three months to June while a slowdown in wage growth to its lowest level in more than two years added to signs that the jobs market is cooling.