UK inflation falls more than expected, but Bank of England will still raise interest rates

July 19th, Paul Dales, chief UK economist at Capital Economics, wrote in a report that UK CPI should continue to decline, although the Bank of England may still have to raise interest rates at its next meeting. CPI fell more than expected in June, with core CPI falling to 6.9% from 7.1% in May.

High interest rates are helping to moderate core inflation in goods and services, but with wage growth still strong, the BoE is likely to raise rates in August from the current 5 percent, Dales said.

“Overall, UK inflation is likely to remain higher than elsewhere for some time, but at least the UK is now following global trends,” he said.