Bankinter: July CPI slows down sharply, although core is still holding at 6.9% – CPI (July): +6.8% year-on-year vs. +6.7% expected +7.9% previously. Over the month: -0.4% month-on-month vs. -0.5% expected and +0.1% previous. Underlying: +6.9% year-on-year vs. +6.8% expected and +6.9% previously.
Assessment: Inflation slowed significantly in July, in the first month with month-on-month falls in price levels since January. Of note are the falls in Housing (-4.1% month-on-month) and Communications (-2.5%). For its part, core CPI resists slowing down and repeats the previous month’s figure. With CPI slowing at a slower pace than expected and the labour market continuing to put pressure on inflation, the BoE still has work to do as it has to deal with the structural problems associated with Brexit. The BoE is expected to raise rates further at the September 21 meeting.
