• Prior +9.4%
• Core CPI +6.2% vs +5.9% y/y expected
• Prior +5.8%

UK inflation has hit double-digits as the annual figure for July comes up above 10%, beating estimates. While this is likely to keep the BOE on the tightening path, it is also a signal of worsening conditions for consumers. The cost-of-living crisis is already weighing heavily on households and this will just add on top of that, alongside higher energy prices.

The pound is a bit jumpy on the data with cable moving up to 1.2140 from 1.2120 before falling back rather quickly. As much as this vindicates more rate hikes by the BOE, I don’t see much upside to that considering that markets are well prepared for what the BOE has to offer in the months ahead. Instead, if the staggering weight of inflation crushes consumption activity, I can see this print being worked to be a negative for the pound instead.