British Inflation Remains Stubborn, Dims Prospect of August Interest Rate Hike
The British inflation rate has proven to be more stubborn than expected, dampening the likelihood of an interest rate hike in August. Contrary to experts' expectations, the inflation rate did not weaken further in June, holding steady at the central bank's target of 2.0 percent, according to data from the statistics office released on Wednesday. Economists surveyed by Reuters had anticipated a decline in inflation to 1.9 percent.
One of the key contributors to the sustained inflation rate was the strong price increases in the hotel industry. This unexpected trend is likely to raise concerns for the Bank of England (BoE) as it highlights continued price pressures in the service sector. These factors collectively diminish the probability of the first interest rate cut since 2020 taking place next month.
The BoE is scheduled to make a decision on the key interest rate at the onset of August, followed by another review in September. The current interest rate stands at 0.525 percent. Additionally, in June, the inflation rate in the service sector remained unexpectedly high at 5.7 percent, with experts initially projecting a slight decrease to 5.6 percent.
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