UK consumer price inflation held at 2.9% year-on-year in July 2025, unchanged from June and matching forecasts, while the Consumer Price Index fell 0.1% month-on-month, according to the Office for National Statistics. Core CPI remained at 3.5% and services inflation rose to 4.5%, slightly above the Bank of England’s expectations, indicating persistent domestic price pressures. The separate Retail Price Index rose 3.2% year-on-year, also matching forecasts and the previous month’s reading. RPI includes mortgage interest and other housing costs, so it often runs above CPI; housing and household services, particularly rent and utility bills, along with food and non-alcoholic beverages, were the largest upward contributors. Sterling was marginally lower against the US dollar and gilt yields eased after the CPI release, while the RPI result left the pound relatively stable against the dollar and euro. The data suggested inflation was easing gradually but remained above the Bank’s 2% CPI target, supporting a cautious approach to further rate cuts as policymakers monitored wages, employment and services prices. RPI remains relevant to index-linked gilts, pensions, some wage negotiations, student-loan repayments, rail fares and other contracts, despite the Office for National Statistics no longer classifying it as a national statistic.