UK Inflation Nears 3% as BoE Awaits Next Moves

UK inflation has risen to 2.9% in July, matching expectations and bringing it close to the 3% threshold.

The increase was driven by housing and household services, but a more encouraging sign is that services inflation eased from 3.6% to 3.4%, while core CPI remained steady at 2.6%.

Further up the pipeline, producer input prices fell 1.7% month-on-month, and annual input inflation slowed sharply to 4.9% from 7.4%.

The Bank of England can afford to remain on hold, waiting to see if the recent headline increase proves temporary, as the combination of upcoming wage, employment, and services-inflation readings will likely matter more for policy decisions.