The falls in CPI inflation from 8.7% in May to 7.9% in June (consensus 8.2%, BoE May MPR 7.9%) and core inflation from 7.1% to 6.9% (consensus 7.1%, CE 7.0%) are unlikely to be enough to prevent the Bank of England from raising interest rates in early August from 5.00%, although it may tilt the balance towards a 25 basis point (bps) hike rather than 50bps. Even so, we think there is enough momentum in wage growth and services inflation to raise our forecast for the peak in Bank Rate from 5.25% to 5.50%.
We’ll be discussing the UK inflation, growth and policy outlook in 20-minute online briefing at 9am BST today. Register here.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to gain:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services