According to the Office for National Statistics:
- The UK yearly inflation rate stayed stable at 2.2% in August.
- The Consumer Prices Index, consisting of owner-occupier real estate expenses (CPIH), increased by 3.1% in the 12 months to August, the same from July.
- The Core CPIH (leaving out energy, food, alcohol, and tobacco) was up 4.3% in the 12 months to August 2024, up from 4.1% in July.
- The CPIH services yearly rate increased from 5.7% in July to 5.9% in August.
- The biggest contribution originated from air travels, countering down contributions from motor fuels, dining establishments, and hotels.
Bank of England Interest Rate Path
Ahead of the inflation numbers, the agreement was for the Bank of England to hold rate of interest constant at 5.0%.
The unforeseen boost in the core inflation rate to 3.6% will likely leave the Bank of England in a holding pattern. Thinking about the August inflation numbers, Friday’s retail sales figures are now vital. Strong UK retail sales figures might sustain demand-driven inflation, potentially postponing a BoE rate cut in Q4 2024.
GBP/USD Reaction to the July UK Inflation Report
Ahead of the UK inflation report, the GBP/USD was up to a low of $1.31517 before reaching a high of $1.31722.
Instantly after the release of the inflation information, the GBP/USD rallied from $1.31573 to a high of $1.31783.
On Wednesday, September 18, the GBP/USD was up 0.10% to $1.31740.