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Investing.com -- U.K. consumer price inflation is expected to rise to 3.7% year over year in July, up from 3.6% in June, according to analysts at Barclays (LON:BARC) Research, in a note dated Monday.
The forecast is based on recent data showing higher prices for food, hotels and motor fuels.
The bank’s tracking suggests a 0.2 percentage point increase from its last published monthly forecast and places the July figure just below the Bank of England’s latest projection.
Core CPI is also forecast to hold steady at 3.7% year over year. Within this measure, non-energy industrial goods inflation is expected to slow to 1.7%, reflecting weaker clothing and footwear prices and monthly declines across durable and non-durable goods.
Services inflation is projected at 4.8%, supported by stronger-than-expected hotel prices and higher water, sewerage and transport service costs. Airfares rose 12.6% month over month in July, adding upward pressure.
Food, alcohol and tobacco prices are forecast to increase 5% year over year, with processed food up 5.4% and unprocessed food up 3.9%.
The brokerage noted that recent retail data pointed to a sharper acceleration than previously expected.
Energy prices are expected to be 0.2% higher than a year earlier, with a 1.5% rise in pump prices offsetting the impact of the 7% cut in the Ofgem price cap.
Barclays’ forecast for the retail price index puts it at 405.3 in July, equivalent to a 4.59% annual increase and 0.20% monthly rise.
That is slightly below market expectations. The bank said mortgage interest payments inflation is continuing to ease, while seasonal factors are boosting housing depreciation.
Transport-related categories, particularly travel costs, are expected to add to the monthly RPI gain, with fares up 9% on the month.