UK inflation cools as expected in July but services surprise to upside

British inflation slowed as expected in July to its lowest annual rate since February 2022, although there were more signs of pressure in core and services prices that the Bank of England is watching, official figures showed on Wednesday.
 

The Office for National Statistics said annual consumer price inflation cooled to 6.8 per cent from June's 7.9 per cent, as the BoE and a Reuters poll of economists had predicted, moving further away from October's 41-year high of 11.1 per cent but still far above the central bank's 2 per cent target.
 

Despite the drop, Britain retains one of the highest rates of price growth in Western Europe, with only Iceland and Austria suffering higher inflation in July.
 

The BoE is watching core inflation - which strips out volatile food and energy prices - and consumer services prices closely.

Core inflation remained at 6.9 per cent in July, flat versus the June reading, and higher than expectations in the Reuters poll for a reading of 6.8 per cent.
 

Services inflation picked up to 7.4 per cent from 7.2 per cent in June.