**As seen in Risk In The Week report 09/15/23, subscribe at cablefxm.co.uk/reports
U.K. headline prices eased by one percentage point to 6.8% Y/y, this was slightly above the consensus of 6.87%. The core CPI metric printed at 6.9% Y/y vs the expectations of 6.8%. On the month, food prices eased to 0.1% from 0.4%, and housing and clothing deflated by 4.1% and 2.2%, respectively. The largest increase was seen in transport prices at 1.4% M/m, this provided about 20bps of upside contribution to the headline in July. While the slowdown in headline prices is welcomed, the core metric is proving to be more sticky, services prices rose to 7.4% Y/y, 0.2 percentage points faster than the prior month. The gauge of services inflation came in higher than what the BoE had been expecting. Looking ahead, the median economist projection sees headline CPI slowing down to 3.1% Y/y in 2024, while the BoE pencils the rate dropping to 2.5%. Economists at Scotiabank said that U.K. CPI could rise about 3/4 of % M/m as they flagged a sharp increase in petrol prices during August. They also warned that there are a few signals of core prices easing recently. The Bank of England will hold its policy meeting one day after the ONS releases inflation figures.
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