According to the report from the Office for National Statistics (ONS), in July consumer prices rose by 2.2% per year after an increase of 2.0% per annum in June (the weakest growth since July 2021). Economists had expected inflation to accelerate to 2.3% per annum.
The ONS said that the largest upward contribution to the CPI annual rates came from housing and household services where prices of gas and electricity fell by less than they did last year. Meanwhile, the largest downward contribution came from restaurants and hotels, where prices of hotels fell this year having risen last year.
Meanwhile, core CPI - which excludes energy, food, alcohol and tobacco - rose by 3.3% per annum (the lowest value since September 2021) after an increase by 3.5% in June. Consensus estimates suggested an increase by 3.4% per annum. On a monthly basis, core consumer prices rose by 0.1%, as expected, compared with the 0.2% increase in June. It was the sixth monthly increase in a row, but the weakest in that sequence.
The data also showed that on a monthly basis, the consumer price index fell by 0.2%, offsetting the June increase (+0.1%). Economists had expected an increase of 0.1%.
Earlier this month, the Bank of England said that May and June's 2% inflation readings probably marked a low point for inflation. According to the Central Bank's forecasts, CPI will reach around 2.75% by the end of the year as the effect of sharp falls in energy prices in 2023 faded, before returning to 2% in the first half of 2026.