First-ever increase in UK annual inflation this year

According to official figures released on Wednesday, the annual inflation rate in Britain increased in July for the first time this year and is now once again beyond the Bank of England’s target.

The Consumer Prices Index (CPI) increased 2.2% in the year ending in July, up from a 2.0% annual gain in June, according to a statement from the Office for National Statistics.

According to the ONS, the increase was “primarily caused by gas and electricity prices falling by less than a year ago.”

Analysts speculate that the Bank of England may be prevented from reducing interest rates too soon by the increased rate of inflation.

The UK’s inflation returned to its 2-percent objective earlier this month, marking the first time the BoE has reduced borrowing prices since the start of the Covid epidemic.

Ruth Gregory, deputy chief UK economist at research firm Capital Economics, stated that the statistics released on Wednesday “may not entirely alleviate the Bank’s concerns about persistent price pressures.”

“And it most likely won’t be sufficient to force two consecutive interest rate cuts in September.”

Gregory did, however, note that she believes the BoE will make another decrease this year, lowering its benchmark interest rate from 5.0 percent to 4.5 percent.