UK inflation rises to 2.1%

Above target

UK inflation unexpectedly rose above target in July to 2.1%, just 24 hours after wage growth hit an 11-year high of 3.9% and the employment rate reached a fresh record.

The two factors combined mean the Bank of England (BOE) is more likely to raise interest rates in 2020 than cut them, according to economists - unless we see a negative Brexit outcome. Expectations had been for consumer price inflation (CPI) to slip to 1.9%, from 2% in June. However, a number of "quirky" factors drove CPI above target for the first time since April, according to James Smith, developed market economist at ING. "The prices of games and toys rose by a massive 8.4% in month-on-month terms, the biggest such rise since the series began in the 1980s," noted Smith. "Accommoda...