UK inflation rose unexpectedly in July, led by energy and airfares, but core pressures remain nuanced. Markets signal BoE may pause in September.

Prices in the UK rose by 3.8% in the year to July, driven mainly by a jump in the price of airfares coinciding with the school summer holidays. That means inflation is at its highest level for 18 months and still far above the Bank of England's target of 2%. The Bank's latest forecast expects inflation to peak at 4% in September.

Food Prices Up 4.9% To Highest Level Since February Prices rose 3.8% in the year to July, up from 3.6% the previous month, stoking fears

Food price inflation also continues to climb, with items such as coffee, fresh orange juice, meat and chocolate seeing the biggest rises. | ITV National News

UK inflation climbed for a second month in July, adding pressure on the Bank of England to reconsider its pace of interest-rate cuts.

By William Schomberg and David Milliken LONDON (Reuters) -British inflation looks set to hit 4% next month, double the Bank of England's target and a level likely to add to nervousness at the central bank about the risk of price growth getting stuck at a stubbornly high rate.

Florian IeIpo, head of macro at Lombard Odier Investment Managers, discuss sticky inflation in the U.K. and why the situation is different on the European continent.

The cost of food and non-alcoholic beverages rose 4.9% in the year to July, up from 4.5% in the year to June. It was the fourth month in a row in which food and drink inflation had risen, bringing prices to their highest since February 2024.