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UK CPI due to potentially raise odds of a September BoE rate hike
Economists expect headline CPI to climb to 2.9% year over year in July, with core inflation seen edging to 2.5%.
The UK Office for National Statistics is set to release July CPI data at 06:00 GMT, a high-impact event that could shift expectations for a Bank of England rate hike at its September 17 meeting, according to FXStreet.
Market focus is likely on whether inflation pressures persist after energy price swings linked to the Middle East war, which has pushed oil prices up by roughly 22%. The report is expected to show headline CPI rising to 2.9% year over year in July from 2.5% in June, while monthly CPI is forecast to increase 0.3% after 0.1% in June.
Core CPI, which excludes energy, food, alcohol, and tobacco, is projected to ease to 2.5% year over year, while service inflation is expected to come in at 3.4% year over year, a key gauge for BoE policymakers.
FXStreet notes that BoE Governor Andrew Bailey previously signaled that if the Middle East conflict continues and triggers second-round effects, the central bank may need to raise rates. The BoE left rates unchanged at 3.75% in July, in a 6-3 vote to hold, and hotter-than-expected core readings could increase the odds of another move.