UK data 'continues to paint a stagflationary picture' as rate cut hopes fade
|The possibility of further Bank of England easing in 2025 faded further last week, as July inflation data surprised again to the upside and the PMIs of business activity showed hints of a reacceleration.
The price data must have been particularly unwelcome news, as the upward trend is now undeniable, and sticky services inflation is rising at a 5% rate.
While sentiment data such as the PMIs have improved, harder data continues to paint a stagflationary picture, with inflation stuck significantly above the central bank target and the jobs market continuing to deteriorate.
We think that the MPC will have no choice but to prioritise the latter, and we are not currently expecting any more cuts in the base rate at all during the rest of 2025.
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