The Office for National Statistics (ONS) reported that in July, the rate of inflation increased to 2.2% from 2% in the previous month.
For the first time since December of last year, the rate has risen as opposed to decreased. This indicates a little faster price increase than previously.
If inflation turns out to be lower than anticipated, the Bank’s rate-setters may be able to reduce interest rates more quickly.
High inflation caused interest rates to rise, increasing the cost of borrowing. Investors currently anticipate that at the September Bank rate-setting meeting, the interest rate will remain at 5%.
Also, there was a decrease in another inflation indicator that the Bank closely monitored that was better than anticipated. Core inflation, which gauges price increases without accounting for volatile expenses like food and energy, decreased from 3.5% in June to 3.3%.
Analysts now believe that next month’s rate decrease is more likely. There was a 36% chance of a cut before the inflation figures arrived, and that chance increased to a 45% likelihood.
Greater cost for train tickets?
The retail price index (RPI), a gauge of inflation for July, usually corresponds to price increases for rail tickets.
Train tickets will cost 3.6% more if the increase is put into effect in January.
