UK Inflation Falls to 17-Month Low of 6.8% but Unlikely to Derail Another Interest Rate Rise

LONDON (AP) — The speed of inflation within the U.Okay. fell sharply in July to a 17-month low largely on the again of decrease vitality costs, official figures confirmed Wednesday, a welcome growth for hard-pressed households struggling throughout the price of dwelling disaster.

The Workplace for Nationwide Statistics stated the annual charge of inflation, as measured by the buyer worth index, was 6.8% in July, its lowest degree since February 2022, the month Russia invaded Ukraine and despatched vitality costs surging.

The decline from June’s 7.9% charge was consistent with economists’ expectations.

The statistics company stated the autumn was largely pushed by a decrease vitality costs as final 12 months’s sharp will increase fell out of the annual comparability. It additionally stated that meals worth inflation, which additionally spiked sharply within the wake of Russia’s invasion of Ukraine, eased too.

Although the decline within the headline charge of inflation will probably be welcome information for hard-pressed households, it is unlikely to derail market expectations that the Financial institution of England will increase rates of interest once more subsequent month, particularly as wages are rising at a document excessive.

Earlier this month, the financial institution, which is tasked with attaining a 2% inflation charge, raised its benchmark rate of interest to a contemporary 15-year excessive of 5.25% and hinted that it will keep excessive for a while to carry down persistently excessive inflation.

Larger rates of interest assist dampen inflation by making it costlier for customers and companies to borrow to purchase houses, vehicles or gear.

Central banks world wide have been elevating borrowing prices to fight inflation unleashed by higher energy prices after Russia invaded Ukraine and provide chain backups as the worldwide financial system recovered from the coronavirus pandemic. Within the U.Okay., inflation hit a peak of 11.1% final October.

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