Data from the Office for National Statistics confirmed a widely expected uptick in inflation in July on Wednesday, following consecutive lower readings since February 2023.
Consumer prices climbed by 2.2%, following readings in line with the Bank of England’s 2% target in May and June, though the increase was smaller than analysts’ expectations for 2.3%.
According to the ONS, gas and electricity prices slowed more slowly in July compared to a year earlier.
Restaurants and hotel prices were the largest downward contributors, the ONS added, after falling in the year to July following a rise previously.
The consumer prices index including owner occupiers' housing costs was up by 3.1% in July, against 2.8% in June, while core inflation - which excludes food and alcohol costs - subsided from 4.2% to 4.1% between June and July.
Forvis Mazars chief economist George Lagarias commented: “Inflation ticking up will probably not discourage the central bank from further rate cuts.
“Despite the uptick, all key measures, headline, producer prices and services inflation rose less than anticipated by markets.”
Scott Douglas, director at finance firm Centrus, noted the uptick was likely to confirm expectations for the policymakers to hold base interest in September.
“The previous cut was finely balanced with five votes against four,” he said, “The Bank of England will want to ensure that further rate cuts do not cause inflation to run ahead”.