Inflation has risen for the first time this year, according to official figures, dealing a blow to Sir Keir Starmer after just one month in office.
The consumer price index (CPI) increased by 2.2 percent in July, up from 2 percent in both May and June, according to the Office for National Statistics. This was less than the 2.3 percent increase projected by analysts.
It is the first time CPI has risen since December 2023, when the Bank of England boosted interest rates to 16-year highs to reduce inflation, which peaked at 11.1 percent in October 2022 following a dramatic surge in oil prices caused by Russia’s invasion of Ukraine.
Yesterday, the key currency pairs remained within narrow ranges. Sterling began the day with some upward momentum following UK labour market reports (which revealed higher-than-expected job growth and a slowing of pay growth).
The main attention today will be on the US July CPI inflation statistics, which will be released this afternoon. The top line rate is predicted to remain at 3.0%, but the core rate is forecast to fall to 3.2% (from 3.3%). The numbers indicate some event risk for the dollar. Previously, the June CPI data was lower than expected, putting negative pressure on the currency.
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