• Prior +7.9%
  • Core CPI +6.9% vs +6.8% y/y expected
  • Prior +6.9%

The headline reading is as per expected, reflecting the big decline in household energy bills in the month of July. But it is all about the core reading, and that is keeping more stubborn and unchanged at 6.9% - similar to June. Looking at the breakdown, food price inflation is also seen cooling further with the year-on-year reading there falling to 14.9% (previously 17.4%). But services inflation remains stubborn and is up from 6.3% in June to 6.5% in July.

I don't see this as providing a meaningful lift for the pound as once again, it all but serves to reaffirm a 25 bps rate hike next month - which is already 100% priced in. And with peak rates seen at 5.91% coming into the data, there's not much room to price beyond 6% at this stage.