Consumer prices fell a seasonally-adjusted 0.02% in July over the previous month, contrasting June's 0.50% rise. July's result marked the sharpest fall in prices since January. The figure was largely due to plunging prices for recreation and culture.
Inflation fell to 2.0% in July from June’s 2.5%. July's reading marked the lowest inflation rate since April. Annual average inflation was unchanged at June's 1.0% in July. Core inflation fell to 1.8% in July, from the previous month's 2.3%.
Despite July’s dip, our panelists see inflation rising back above the Bank of England’s 2.0% target by the end of the year, which could put pressure on the Bank of England to dial back its monetary stimulus.
FocusEconomics Consensus Forecast panelists expect inflation to average 1.9% in 2021, which is up 0.2 percentage points from last month’s forecast, and 2.1% in 2022.