A fall in gas and electricity prices accounted for the majority of the drop
UK inflation continued its decline with July’s reading showing an annualised CPI rate of 6.8%, down from 7.9% in June (although this figure was slightly ahead of most forecasts). The fall in prices of gas and electricity contributed to the majority of the drop but stripping these out, the core CPI level did not budge from the previous month and this will cause some level of concern for the Bank of England (BoE) rate outlook as it suggests that inflation is not falling quickly enough and could continue to exhibit this stickiness, especially so after yesterday’s wage data. Continued BoE hikes towards 6% look nailed on in markets.
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