Inflation likely picked up in July, paving the way for officials to report the first uptick of the year this week, according to analysts.
Following two consecutive months of inflation readings in line with the Bank of England’s 2% target, expectations are for consumer prices to have risen by 2.3% in July.
This would deal a blow to hopes the Bank of England could cut base interest for a second time later this year, after the first reduction in four years earlier this month.
Catherine Mann, an external Monetary Policy Committee member at the bank, said on Monday that the UK was a way off getting inflation fully under control.
“Inflation has come down,” she acknowledged to the Financial Times, “but we shouldn’t be seduced by headline inflation because of the role of energy and external aspects working through”.
She highlighted surveys implying companies were set to hike wages and prices over the coming year, noting the increases could pose “a problem” down the line.
However, a separate report from the Chartered Institute of Personnel and Development on Monday found firms had scaled back on expectations for pay rises.
Companies have pencilled in rises of around 3% for the coming year down from 4% three months ago, according to the group, though this is still above the Bank of England’s inflation target.
The increase would also come after fuel prices have increased due to growing geopolitical tensions, with wholesale gas and oil both climbing on Monday.
The Office for National Statistics will reveal July’s inflation data this coming Wednesday.