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U.K. Inflation Posts a Temporary Slowdown on Its Way to 4%

  • CPI falls back to 2% target for first time since April
  • Cost of goods leaving factory gates rose the most in a decade
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U.K. inflation eased in July in what is widely seen as a blip on its way to double the Bank of England’s target this year.

Consumer prices fell back to the 2% goal for the first time since April, easing from a 2.5% increase in June, the Office for National Statistics said Wednesday. It’s the first time in four months that inflation rose less than economists had expected.
 
The slowdown partly reflects a sharp rise in prices in July last year, when some of the restrictions deployed during the first coronavirus lockdown were eased. With the economy mostly reopen except for overseas travel, inflation is expected to accelerate quickly, driven largely by the cost of energy and shortages of both goods and labor. The Bank of England plans to reduce its stimulus to ease pressure on prices.