United Kingdom Inflation August 2019

United Kingdom

United Kingdom: Inflation rises in July, although uptick could be short-lived

August 14, 2019

Consumer prices were flat month-on-month in July, matching June’s reading, as lower prices for clothing and footwear offset higher prices for recreation and culture.

Inflation increased from 2.0% in June to 2.1% in July, slightly above the Bank of England’s (BoE) 2.0% target and confounding market expectations of a fall to 1.9%. Core inflation—which excludes food and energy costs—rose from 1.8% to 1.9%.

Looking ahead, recent sterling weakness coupled with higher wages could add upward pressure to prices in the coming months. However, our panelists still see inflation averaging slightly below target in Q3 and Q4, partly on low energy prices. Inflation is unlikely to become a concern for the Bank of England, and any changes to the policy stance will continue to hinge on the outcome of Brexit.

The Bank of England sees inflation at 1.6% in Q4 2019 and 2.1% in Q4 2020. FocusEconomics Consensus Forecast panelists expect inflation to average 1.9% in both 2019 and 2020.

Author:, Economist

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United Kingdom Inflation Chart

United Kingdom Inflation July 2019

Note: Annual and monthly variation of consumer price index in %.
Source: Office for National Statistics (ONS) and FocusEconomics calculations.

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