Latest data released by ONS - 18 August 2021

  • Prior +2.5%
  • Core CPI +1.8% vs +2.0% y/y expected
  • Prior +2.3%

A slight miss on estimates but perhaps a welcome one for the BOE as annual headline inflation sticks to the 2% target in July. The softer readings relative to June may help to reaffirm the 'transitory' narrative but it is still too early to draw much conclusions for now.

With delta variant concerns emerging in many parts across the globe, supply chain disruptions will still persist for some time and that should keep price pressures elevated.

The details show that clothing, footwear, and a variety of recreational goods and services made the largest downward contributions to the annual inflation rate last month, offset by a rise in transport inflation.