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James Smith, Developed Markets Economist at ING, notes that UK’s headline CPI picked up to 2.5% in July, driven predominantly by the sharp rise in petrol prices through the second quarter.

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“But importantly, fuel costs have begun to stabilise, and the price of petrol, in fact, fell by 0.6% last month. Barring any further gyrations in oil prices, we think July’s figure represents a peak, and we expect CPI to begin trending downwards over the next few months gradually.”

“The impact of the pound’s post-Brexit plunge is continuing to fade – prices have more-or-less adjusted to the weaker level of sterling – and this is seeing core goods inflation slow. We expect this to keep core CPI close to 2% for the foreseeable future, although there’s a risk that this slips lower.”

“For the Bank of England, this is likely to be another argument to remain on the sidelines for the next few months, as Brexit uncertainty becomes an increasing concern.”