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UK Consumer price inflation likely declined to an annual pace of 2.3% in July falling, from a near-two-year high of 2.5% in June, as base comparisons that saw re-openings a year ago likely weren't matched this July. That, analysts note, means a lower annual rate of inflation, now, although a rise to between 3.5% and 4.0% is seen later this year. The MPC expects inflation to hit 4% by year end, a sharp increase from the previously-forecast peak of 2.5%.
Clothing prices could dampen inflation in July, as they declined in line with historical norms last month, in contrast with July of 2020 when sales patterns were distorted by the reopening of non-essential shops. A surge in used-car costs could counter some of that downward pressure; prices rose by an annual rate of 14.1%, according to Auto Trader, up from a 11.1% jump in June, when used-car prices added 0.08 percentage points to the change in CPI.
Producer prices likely steadied at elevated rates, according to City economists, but likely remained below May's peak. Output inflation is forecast at +9.1% y/y, while output prices are set to rise 4.3%, both unchanged from June.
Source: ONS
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.