UK consumer price inflation remained at 2.9% year-on-year in July 2025, unchanged from June and in line with market forecasts, official data from the Office for National Statistics showed. The Consumer Price Index (CPI), a measure of consumer price changes, fell 0.1% month-on-month. Core inflation held at 3.5%, while services inflation reached 4.5%, slightly above the Bank of England’s expectations, pointing to persistent domestic price pressures. The data offered some relief to markets, with sterling trading marginally lower against the US dollar and gilt yields easing as investors saw a greater likelihood of a rate cut at the Bank’s September meeting. The Bank had reduced its benchmark rate to 4.5% in August, its first cut in more than four years. Policymakers are expected to balance easing inflation and a cooling labor market against elevated services inflation. For households, the steady rate means the cost-of-living burden remains, especially for housing, utilities and food, although wage growth has outpaced inflation in recent months. For businesses, the figures affect borrowing costs and consumer demand, while input-cost pressures persist despite easing supply-chain disruptions. Further rate decisions will depend on wage data and services-price trends, with the outlook pointing to gradual monetary easing rather than rapid cuts.