The UK’s inflation remained unchanged in July, which was unexpected for markets. Inflation came in at 2.6% in July, unchanged from June, the Office for National Statistics said. Meanwhile, analysts had expected it to climb slightly to 2.7%.
According to economists, falling fuel prices which were offset by growing costs for food, clothes and other household goods, left inflation rate unchanged in July.
Prices are seen to rise further as the Bank of England said earlier in the month that it forecast inflation to move closer to 3% in October after reaching the 4-year peak of 2.9% in May.
A less hawkish inflation outlook reduces the likelihood that majority of the BoE’s officials will join a minority that is currently voting for a rate hike.
The year-on-year increase in producers’ raw material costs fell to 6.5% last month, down from 10% in June. That is the lowest level over the past 12 months and the biggest month-to-month slowdown since April 2012.
The increase in inflation led to a decline in household incomes in 2017, which in turn caused a slowdown in spending and an overall economic recovery, as wages did not match the growth of the cost of living.
