Key facts
- UK annual wage growth, excluding bonuses, reached 3.5% in the second quarter.
- Britain's annual inflation rate rose to 2.9% in July from 2.6% in June.
- Higher household energy bills contributed to the increase in inflation.
- Most economists expect the Bank of England to maintain interest rates at 3.75% for the rest of the year.
- Financial markets are pricing in a single quarter-point rate increase by year-end.
Britain's annual rate of consumer price inflation increased in July to 2.9% from a 15-month low of 2.6% in June, official figures showed. Economists polled by Reuters had widely expected the rise, spurred by an increase in household energy bills after a 13% increase in a price cap set by regulator Ofgem took effect last month. The Bank of England had predicted a smaller rise to 2.8% in forecasts published at the end of last month. Meanwhile, UK annual wage growth, excluding bonuses, was 3.5% in the second quarter, slightly above economists' expectations. Most economists polled by Reuters expect the Bank of England to hold interest rates at 3.75% for the rest of the year.