UK headline inflation dropped sharply to 6.8% in July, in line with economists' expectations. However, core inflation remained unchanged at 6.9%, slightly above the consensus forecast of 6.8%. Falling gas and electricity prices contributed to the decrease in the headline CPI, while food prices rose but at a slower pace than the previous year. The Bank of England recently voted to increase the main interest rate to 5.25% and indicated that high interest rates would continue until inflation is brought back to the 2% target. The unemployment rate rose to 4.2% in June, signaling a potential weakening in labor demand. Wages grew at a rate of 7.8% year-on-year, but remained below inflation.

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