The UK’s annual inflation rate took a notable dip, falling to 6.8% in July from June’s 7.9%. This drop can be attributed to a decrease in energy prices over the last year, resulting in the smallest uptick in the cost of living since February 2022.
Financial markets were prepared for a noticeable relief in upward price pressure last month, and the Office for National Statistics (ONS) reported a figure that was in line with their expectations.
Despite the substantial decline in the Consumer Prices Index (CPI), which is the government’s favoured measure of inflation, experts noted that the overall economic outlook wasn’t improving rapidly enough to prevent the possibility of further interest rate hikes by the Bank of England.
This decrease in CPI marks a significant point where, for the first time since the fall of 2021, prices are increasing at a slower pace than wages. Wages grew by 8.2% year-on-year during the three months leading up to June. This dynamic adds pressure on the Bank’s policymakers to consider a 15th interest rate increase since December 2021 in their upcoming meeting.
The primary contributor to the decline in July’s inflation figures, according to the ONS, was the lack of a substantial surge in gas and electricity bills compared to the same month in the previous year. Additionally, food inflation saw a decline, dropping below 15% on an annual basis.
On the flip side, core inflation, which excludes volatile components such as fuel and food, held steady at 6.9% during the same period. Meanwhile, service sector inflation, a closely watched indicator of domestically generated price pressure, increased from 7.2% to 7.4%.
Despite the substantial decline observed last month, the UK’s inflation rate remained higher than those of both the US (3.2%) and the eurozone (5.3%) in July.
Source: ONS as at 16/08/2023
Important Information: This document is a general communication being provided for informational purposes only. It is educational in nature and not designed to be taken as advice or a recommendation for any specific investment product, strategy, plan feature or other purpose in any jurisdiction, nor is it a commitment from Clever to participate in any of the transactions mentioned herein. Any examples used are generic, hypothetical and for illustration purposes only. This material does not contain sufficient information to support an investment decision and it should not be relied upon by you in evaluating the merits of investing in any securities or products. You should make an independent assessment of the legal, regulatory, tax, credit, and accounting implications and determine – together with your own professional advisers if appropriate – if any investment mentioned herein is believed to be suitable. Investors should ensure that they obtain all available relevant information before making any investment. Any forecasts, figures, opinions or investment techniques and strategies set out are for information purposes only, based on certain assumptions and current market conditions and are subject to change without prior notice. All information presented herein is considered to be accurate at the time of production, but no warranty of accuracy is given and no liability in respect of any error or omission is accepted. Issued by Clever Adviser Technology Ltd (Clever), a company registered in England and Wales (company number: 2910523) with registered office at Watergate House, 85 Watergate Street, Chester, Cheshire CH1 2LF.
The post UK Inflation Falls appeared first on Clever.