Consumer prices rise 0.2% in July, in line with expectations

Service sector

In contrast, service price inflation slowed to 2.6% year-on-year, down from 2.9% in June. Transport prices in particular fell by 0.9% year-on-year, reversing the previous month’s growth, while communication services prices fell more sharply, to -5.7% year-on-year.

Food sector

Food price inflation continued its decelerating trend, increasing by 0.5% year-on-year, compared to 0.8% in June. However, fresh food prices accelerated to 2.8% year-on-year, compared to 2.1%. Excluding fresh food, food inflation remained broadly stable at 0.1% year-on-year.

Manufactured products

Manufactured goods prices remained stable year-on-year, with clothing and footwear prices showing a slight acceleration to 0.9% year-on-year, while health care product prices continued to decline but at a slower pace of -1.0% year-on-year.

Economic consequences

The inflation implications of this report are significant for the economic outlook. An interest rate cut is likely to remain on the cards for September, as policymakers assess headline inflation as subdued relative to sector-specific pressures. Following the report, stock futures were relatively unchanged, while Treasury yields edged higher. Gold prices continued to hover near all-time highs, reflecting continued economic uncertainty.

The mixed inflation outlook requires policymakers to balance sectoral pressures with overall economic stability. The coming months will be critical in shaping monetary policy and the economy as a whole.