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Official national statistics showed on Wednesday that UK inflation held steady at the Bank of England’s 2% target in June.
Economists polled by Reuters said the overall figure was higher than analysts’ expectations of 1.9% and consistent with previous data. Reading volume in May 2%.
Sterling rose slightly shortly after the news, trading at $1.2977 at 7:21 a.m. London time.
In view of the dominant position of the service industry in the British economy and its reflection on domestic price increases, the Bank of England pays close attention to services industry inflation, which remained at 5.7% in June.
Core inflation, which excludes energy, food, alcohol and tobacco, was 3.5%, also unchanged from May’s 3.5%.
The ONS said rising restaurant and hotel prices were the biggest contributor to upward pressure, while clothing and footwear costs had fallen the most.
In summer, consumers continue to spend more on leisure activities, including cultural experiences and concerts famous artist Taylor Swift, Bruce Springsteen, Pink and Sting, among others, toured the country.
Bank of England rate cut takes center stage
Investors have been eyeing a possible rate cut in August as headline inflation shows signs of continued easing. Anticipations for such a trim have dimmed following the release of the latest print.
Jane Foley, head of FX strategy at Rabobank, said stubborn services inflation could lead Bank of England policymakers to remain cautious ahead of next month’s meeting.
“The August deal really hasn’t been finalized yet,” she told CNBC’s “Squawk Box Europe” on Wednesday.
“I think many members of the policy committee and many economists will be looking at services sector inflation and feeling a little concerned,” she added.
Jonathan Haskel, a member of the Bank of England’s Monetary Policy Committee last week He said he believed interest rates should remain unchanged due to continued pressure in the labor market.
Huw Pill, the Bank of England’s chief economist, added later this week that the timing of the rate cut remained an uncertainty. “Open-ended questions” Due to the “disturbing power” of wage growth.
The Bank of England’s key interest rate has remained at a 16-year high of 5.25% since last month August 2023the inflation rate at that time was 7.9%.
Wednesday’s data was the first since Britain’s July 4 general election but did not reflect a change in government. Britain’s new finance minister, Darren Jones, said in a statement that prices are still too high.
“We face the legacy of fourteen years of chaos and economic irresponsibility. That’s why this government is taking the tough decisions now to repair the foundations so that we can rebuild Britain and make it better across the country,” he said said Wednesday.
