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UK inflation steadies core, keeping BOE rate hike risk alive

With energy prices cited as the main driver of the headline rise, GBP/USD was up 0.1% to 1.3541 after the data.

Reported · Written up by our desk · Central Banks

UK inflation data from the UK showed headline CPI in line with expectations for July, rising 2.9% year over year versus the 2.9% forecast, while core CPI held steady at 2.6% year over year, matching its June pace, according to Forexlive. Forexlive said the increase in headline inflation was mainly driven by energy prices, following a July change to the Ofgem price cap. Households were estimated to be paying £221 more on average for their energy bills, while services inflation eased slightly to 3.4% in July from 3.6% in June. The outlet also pointed to easing in food price inflation, with rates falling to 1.3% from 1.7%, while goods price inflation rebounded to 2.2% from 1.7%. That push in goods prices was described as keeping core inflation more “sticky,” helping explain why core remained steady. Forexlive added that the data is unlikely to force a quick policy move in September, but it does leave the door open for another Bank of England move before year end. After the release, GBP/USD was up 0.1% on the day to 1.3541.

Latest closeGBP/USD 1.354 ▲0.3%

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