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The UK headline inflation figure cooled as expected last month, but core inflation proved stubborn, figures from the Office for National Statistics showed on Wednesday.
Annually, consumer prices rose by 6.8% in July, cooling from a 7.9% jump in June. July’s reading was in line with market forecasts, as cited by FXStreet.
The ONS said that falling gas and electricity prices were the largest contributor to the falling annual rate. A cooling in food inflation also helped.
‘Hotels and passenger transport by air were the classes that provided the largest offsetting upward contributions to the change in the rate,’ the ONS noted.
On a monthly basis, UK consumer prices fell 0.4%, compared to a 0.1% rise in June. Market expectations had been for a 0.5% fall.
Core inflation - excluding energy, food, alcohol, and tobacco - was unchanged on an annual basis from June’s reading of 6.9%. It had been expected to cool to 6.8%.
Separately, the ONS reported that UK producer prices fell in July.
Producer input prices fell 0.4% on a monthly basis in July, compared to the 1.3% fall in June. Market forecasts were for no change in July.
Annually, producer input prices fell 3.3%, having fallen by a revised 2.9% in June. They had been expected to fall by 3.1% in July.
June’s annual figure was initially reported as a 2.7% fall.
‘Inputs of crude oil and petroleum products provided the largest downward contributions to the annual rates of input and output inflation, respectively,’ the ONS said.
However, it noted that while annual price inflation rates have turned negative, the index levels for both input and output prices are still ‘substantially higher’ than the levels seen in 2021.
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