UK inflation accelerated in July, widening the gap with the eurozone to its largest in nearly two years, according to fresh data. The UK Consumer Prices Index (CPI) climbed to 3.8% year-on-year, up from 3.6% in June, driven by higher transport, fuel, and food costs. In contrast, eurozone inflation remained stable at 2%, with much lower readings in major economies such as France (0.9%) and Germany (1.8%).
The 1.8 percentage-point gap marks the widest divergence since September 2023 and highlights persistent inflationary pressures confronting the Bank of England (BoE), which recently cut interest rates to 4%. Analysts warn that rising wages, increases in employer national insurance contributions, and the higher living wage are adding to underlying price growth.
While the European Central Bank has kept rates steady at 2%, the UK faces more entrenched inflation. Food prices rose nearly 5% over the past year, and services inflation climbed to 5%, further complicating the BoE’s monetary policy outlook. Economists now doubt the likelihood of another rate cut this year, with July’s figures effectively ending hopes for a September reduction.
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“The widening gap between UK and Eurozone inflation highlights just how persistent Britain’s price pressures remain. With wages and living costs still rising, the Bank of England faces a tough road ahead in balancing inflation control with growth
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