UK Inflation Falls – Charts and Reaction

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,
but
hotels
and
airline
tickets
put
upward
pressure
on
prices.

Some
Reaction

James Lynch,
fixed
income
manager
at
Aegon
Asset
Management:
“This
along
with
yesterday’s
wage
data
will
mean
if
there
was
a
BoE
meeting
with
only
this
information
another
hike
of
policy
rate
of
25bps
would
have
been
on
the
cards.
We
do
however
have
another
round
of
employment
and
inflation
data
to
look
forward
to
before
the
next
meeting
on
the
21st September,
and
this
will
decide
the
size
of
hike,
but
for
now
25bps
looks
the
most
likely
option.”

Oliver
Blackbourn,
multi
asset
portfolio
manager
at
Janus
Henderson
Investors:
“Core
inflation
remains
stubbornly
high
at
6.9%
and
is
now
slightly
above
the
headline
level.
This
presents
a
headache
for
the
Bank
of
England
(BoE)
as
it
will
want
to
see
this
less
volatile
measure
decline
to
suggest
that
cost
pressures
are
sustainably
returning
to
target.
Core
inflation
suggests
a
stickier
underlying
inflation
dynamic
as
services
cost
growth
continued
to
accelerate.”

Neil
Birrell,
chief
investment
officer
at
Premier
Miton
Investors:
“Inflation
in
the
UK
came
in
a
little
higher
than
expected
in
July,
which
after
strong
wage
data
will
keep
the
Bank
of
England
focused
on
their
next
decision
on
interest
rates.
They
have
no
room
for
complacency
and
would
have
been
hoping,
as
we
all
were,
for
a
bigger
improvement
in
inflation
last
month.
We
are
not
yet
at
the
stage
in
the
UK
that
we
can
say
that
we
are
winning
the
battle
on
inflation,
there
are
too
many
pressures.

Sekar
Indran,
senior
portfolio
manager
at
Titan
Asset
Management:
 “Core
inflation
remains
stubborn
and
after
yesterday’s
strong
wage
growth
data,
a
50
basis
point
hike
is
not
off
the
table
in
the
BoE’s
September
meeting.”

Hussain
Mehdi,
Macro
&
Investment
Strategist,
HSBC
Asset
Management: “With
core
inflation
remaining
stubborn,
and
following
recent
upside
surprises
to
GDP
and
wage
growth,
there
is
now
a
very
good
chance
the
Bank
of
England
will
implement
another
25bp
rate
hike
at
its
upcoming
meeting
…
We
think
a
50bp
hike
is
unlikely
for
the
MPC
given
some
signs
of
cooling
labour
market
conditions
–
namely
rising
unemployment
and
falling
vacancies.”

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