UK inflation rises to 18-month high in July

UK annual inflation rose more than expected in July, increasing pressure on the Bank of England (BoE) to reconsider the pace of interest rate cuts.

According to data released Wednesday by the Office for National Statistics, UK consumer prices rose by 3.8% year-on-year (YoY) in July, the fastest pace since January 2024. This compares to a forecast of 3.7%, following a 3.6% increase in June.

Inflation in Britain's services sector - which is watched closely by the Bank of England - accelerated to 5%, above the Bank of England's forecast of 4.9%.

Grant Fetner, the office's chief economist, explained in a post on the X platform that the rise in inflation pushed the Consumer Price Index to its highest annual rate since the beginning of last year, primarily driven by a significant increase in airfares.

He also noted that the price of petrol and diesel increased, compared to the decline in the same period last year, and that food inflation continued to rise, including coffee, fresh orange juice, meat, and chocolate.