UK inflation slows sharply, offering some relief to Bank of England

London, July 19 (BNA): British inflation fell more than expected in June and was at its slowest in more than a year at 7.9%, according to official data that will ease some of the pressure on the Bank of England to keep growing. Sharply raise interest rates.

The pound weakened against the US dollar and euro as the Office for National Statistics said the growth rate of consumer price inflation was the lowest since March 2022 but remained higher than the pace of price growth in other large and rich economies, Reuters reported.

Economists polled by Reuters expected the CPI rate in the 12 months through June to fall to 8.2% from 8.7% in May, further away from October’s 41-year high of 11.1% but still well above the Bank’s target. England at 2%.

The Bank of England said in May that it expected inflation to fall in June to 7.9%.

“Overall, the UK is likely to continue to have higher inflation rates than anywhere else for a while, but at least the UK is now following the global trend,” said Paul Dales, chief UK economist at Capital Economics.

Investors bet on a rate hike from the Bank of England. Markets are now showing that a 25bps rally next month is more likely than the 50bps rally that was priced in on Tuesday.

The bank rate that peaked at 6% is no longer fully priced in, which it was on Tuesday.

Core inflation – which excludes food, energy, alcohol and tobacco prices and which the Bank of England uses to gauge core price pressures – also fell more than expected, coming in at 6.9% from 7.1% in May, the joint highest in more than 30 years.

MI