Inflation rises for first time since December

14th Aug 2024 07:20

(Sharecast News) - Consumer price inflation rose in July for the first time since December, albeit less than expected.

According to figures released on Wednesday by the Office for National Statistics, CPI rose by 2.2%, up from 2% in June and May but coming in below expectations of 2.3%. It is now back above the Bank of England's 2% target.

The ONS said the largest upward contribution came from housing and household services where prices of gas and electricity fell by less than they did last year. The largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.

The figures also showed that core CPI - which strips out food, energy, alcohol and tobacco - fell to 3.3% in July from 3.5% in June.

Meanwhile, the CPI services annual rate fell to 5.2% in July from 5.7% a month earlier.

Grant Fitzner, chief economist at the ONS, said: "Inflation ticked up a little in July as although domestic energy costs fell, they fell by less than a year ago.

"This was partially offset by hotel costs, which fell in July after strong growth in June."

Ruth Gregory, deputy chief UK economist at Capital Economics, said the smaller-than-expected rise in CPI inflation and the sharp fall in services inflation to a two-year low "will reassure the Bank of England that the disinflation process is on track and opens the door to more interest rate cuts later this year".