The consumer price index including owner occupiers' housing costs rose 2.6 percent annually in July, the same rate as in June.
As per the data, on YoY basis, wheat became cheaper by (-) 1.16 per cent, while protein-based food items such as eggs, meat and fish became dearer by 3.30 per cent. However, a softer outlook for inflation will reduce the chance of more BoE policymakers joining the minority who are calling for a rate rise now.
The decline was countered in part by food prices notching 0.1% higher month on month in July after falling by 0.2% over the period past year.
The pound headed lower against major currency crosses on Tuesday (15 August) after stable inflation data for July reduced the likelihood of an interest rate by the Bank of England over the short-term.
Clothes, utilities and food prices rose, but were counterbalanced by falling fuel prices to deliver the same figure as the previous month.
Underlying prices also declined marginally on the month with the year-on-year inflation rate unchanged at 2.4% compared with expectations of a small increase to 2.5%.
"Retailers also felt the pinch from the weak pound in July, as their own costs increased and they were left with the hard decision of whether to absorb the costs or pass them onto the consumer". As a result, motor fuel prices fell once again last month but other moves balanced this out, according to the Office for National Statistics (ONS). "WPI inflation is likely to rise further over coming months and the print (may be) between 1.8-2.8 per cent during the remainder of 2017-18", Nayar said.
Core CPI was forecast at 2.5% but came in at 2.4%.
It stood at 0.90 per cent in June (provisional) and 0.63% during the corresponding month of the previous year.
The U.K. inflation rate was unchanged in July as the effects of the pound's drop after the Brexit vote a year ago started to fade.
British pound slumped to a one-month of 1.2851 against United States dollar and extended weakness to a fresh 10-month low against the euro. Now that pressure on the Bank of England to raise interest rates has eased off, exporters may well be looking to take advantage of the opportunity by selling greater volumes of goods.
Wells points to rail fares, which will be reset in January based on today's retail price index, which was 3.6 per cent.