The UK consumer price index rose by 2.6% in July on yearly basis, the same as in June, but didn't match expectations of a 2.7% rise. Also, the core CPI, which excludes food and energy prices rose by 2.4% below expectations of a 2.5% rise.
On monthly basis, fuel prices witnessed further declines, which had the biggest impact on the CPI index this month, Communication prices also declined. While housing and household services rose as electricity and gas prices surged. The monthly CPI fell by 0.1% in July.
The producer price index rose by 3.2% in July better than the 3.1% expected, but lower than the 3.3% scored in June.
Inflation figures will remain one of the most important factors to focus on, as they affect the BOE's monetary policy guidance. The latest data will continue to undermine expectations of rising inflation, raising doubts about raising interest rates.
In the wake of the data, sterling fell sharply reaching levels of 1.29, its lowest in almost a month against US dollar.
