UK inflation rose to 2.2% in July, uncertainty about interest rate cuts looms

From Morningstar: 2024-08-14 06:13:00

The UK’s inflation rate rose to 2.2% in July, up from 2% in June, due to unfavorable comparisons with gas and electricity prices in July 2023. Food inflation increased by 1.5% year over year, but interest rate cuts are still expected later this year, though the timing is uncertain.

Core inflation dropped to 3.3% in July, slightly below expectations. Services inflation also fell from 5.7% to 5.2%, lower than anticipated. Financial markets are predicting potential interest rate cuts in both November and December, taking the base rate to 4.5%.

Future rate cuts by the Bank of England may occur in September or November, with mixed expert opinions. Some believe a rate cut in September is unlikely, while others expect a gradual cutting cycle over time. Recent data showing falling unemployment and moderated wage growth may not be enough evidence for a September rate cut.



Read more at Morningstar: UK Inflation Rises – Rate Cut Uncertainty Now Greater