UK inflation rises slightly in July

UK inflation accelerated in July to 2.2% year-on-year, two-tenths faster than the previous month, due to a smaller fall in energy prices than in 2023.

This is the first rise in inflation since December, the Office for National Statistics said in its monthly report published on Wednesday. The index is above the Bank of England’s 2% target.

Earlier this month, the institution cut its official interest rate for the first time since the pandemic, from 5.25 to 5%, but warned of its concern about continued inflation in the country.

Capital Economics says inflation is rising less than analysts had expected and prices are falling sharply in the services sector.

This, the company says, “will reassure the Bank of England that the process of disinflation is on the right track.”

Yael Selvin, an economist at KPMG in the UK, agreed, saying: “Despite the modest rise, inflation remained relatively moderate in July.”

Prices in the country have risen as the economy reopens after the pandemic and the energy crisis caused by Russia’s invasion of Ukraine.

At the end of 2022, the inflation rate reached 11%, which, in addition to rising interest rates, caused a serious crisis in the purchasing power of British families that affected economic activity.

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