Commenting on today’s data from the Office of National Statistics, that showed the annual rate of CPI inflation staying at 2.0% in June 2024, the same rate as in May 2024, Anna Leach, Chief Economist at the Institute of Directors, said:

“The Bank will be relieved that headline inflation has remained at target in June in line with their expectations. That relief will be tempered though by services inflation holding at 5.7%, well above their expectations.

“Stickiness in services inflation – a key measure of domestic inflationary pressures – lowers the likelihood of an August rate reduction. All eyes will be on tomorrow’s wage data to see whether it will spur a summer rate cut by the MPC.

“Inflation is likely to rise slightly in the coming months, as energy price inflation picks up reinforcing sticky services inflation. But all being well, inflation should moderate further out, supporting a downward trend in interest rates.”