The UK’s inflation rate is comfortably back to target: inflation held at 2 per cent in the 12 months leading up to June, the Office for National Statistics confirmed this morning. This rate is unchanged from last month.
Yet this morning’s news is stirring up doubts that the Bank of England will go for its first rate cut in August. This is because, while the headline rate is back to the Bank’s target, the services annual rate remains sticky, unchanged from 5.7 per cent. Big reductions in clothing and footwear – which slowed to 1.6 per cent in the year to June, down from 3 per cent in the year to May – were offset by fairly large increases in other sectors. Restaurants and hotels rose to 6.3 per cent in the year to June, up from 5.8 per cent to May.
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