UK Inflation Set to Rise 2.9% YoY in July Amid Higher Energy Prices

The UK's Consumer Price Index (CPI) report for July is set to show an inflation pickup, driven by higher energy prices, according to economists.

The Office for National Statistics will release the data at 06:00 GMT, which could impact market expectations for a Bank of England interest rate hike in September and stir volatility in the British Pound (GBP) as traders assess the energy price swings.

UK CPI is expected to rise 2.9% year-over-year (YoY) in July, surpassing the BoE's forecast of 2.8%, moving further away from its 2% target.

TD Securities warns that several components are now posing upside risks to the UK's disinflation narrative, including food prices and airfare inflation, which could make it difficult for the BoE to bring inflation back to comfortable levels.