PwC comments on August 2024 CPI figures

Commenting on the Office of National Statistics consumer price index for July 2024, Jake Finney, Economist at PwC, comments:

“Headline CPI inflation ticked up to 2.2% in July, despite the fact that consumer prices actually fell by 0.2% relative to the previous month. This was primarily due to base effects, as the sharp fall in energy prices in July 2023 dropped out of the annual comparison. 

“It is not cause for panic stations yet. The rise in inflation was lower than the Bank of England’s forecasts earlier this month (2.4%) and consensus expectations (2.3%). Core inflation is at its lowest rate since September 2021 and services inflation is at its lowest rate since June 2022. However, as the downward effect from previous energy price falls dissipates, it brings to light the importance of reducing domestic inflation pressures to achieve a sustainable return to target.

“The latest inflation data is unlikely to shift the dial for the Bank of England on interest rates. Barring a significant surprise in the economic data next month, a rate cut in September seems unlikely but November is still on the table.”