UK inflation for the second consecutive month plunged sharply, hitting a 17-month low in July, according to official data released on Wednesday.
According to the Office for National Statistics, consumer prices increased 6.8% last month compared to the same period last year. Since the end of June, an energy price cap set by the energy regulator was lowered, resulting in the smallest annual increase since February 2022 and decreases in the price of gas and electricity.
“Although remaining high, food price inflation has also eased again, particularly for milk, bread and cereal,” said ONS deputy director of prices Matthew Corde.
From 17.4% in June to 14.9% in July, the inflation rate for food prices increased less than in June but remained high last month when compared to a year ago.
But not all of the news was good.
Wages are growing at the fastest annual rate since records have began, according to data released on Tuesday. And that rapid pay growth is a factor in the persistently high core inflation rate, which is a better indicator of the underlying trend in prices because it excludes volatile costs like food and energy.
Core inflation remained at 6.9% in July, with higher prices for services, which typically require more labor, offsetting lower prices for goods. Compared to June, when it was 7.2%, services inflation slightly increased last month to 7.4%.
“With wage growth and services inflation both stronger than the [Bank of England] had expected, it seems clear that the bank has more work to do,” said Ruth Gregory, deputy chief UK economist at Capital Economics.
The consulting firm anticipates that the central bank will raise its benchmark interest rate by another quarter percentage point in September, bringing it to 5.5%.
Source-CNN
