- July CPI +2.9% vs +2.9% y/y expected
- Prior +2.6%
- July core CPI +2.6% vs +2.5% y/y expected
- Prior +2.6%
The headline figure is in-line with estimates but core annual inflation is seen holding steady in July at 2.6%, as it was back in June.
As mentioned in the preview, the rise in energy prices is what mostly contributed to the jump in headline annual inflation. The rise in prices comes after a change in the Ofgem price cap in July, with households estimated to be paying £221 on average more on their energy bill.
Meanwhile, services inflation is seen easing slightly to 3.4% in July – down from 3.6% in June. That largely stems from a smaller rise in air fares this year (+11.7% between June and July 2026), compared to the the year before (+30.2% between June and July 2025). ONS notes that the downward effect from air fares came almost entirely from European routes, where prices fell by 4.3% compared with a 38% rise in July 2025.
Food price inflation also eased in July, reflecting a fall to 1.3% from 1.7% in the month before. However, goods price inflation is seen pushing back up above 2% with the July estimate seen at 2.2% – up from 1.7% in June. The stronger jump there is what is keeping core prices more sticky in the latest report here.
Overall, this is not likely to push the BOE into taking any hasty actions in September still but it definitely leaves the door open for perhaps another move by year-end.
GBP/USD is up 0.1% on the day to 1.3541 currently, not all too much changed from the report.
This article was written by Justin Low at investinglive.com.