The smaller-than-expected rise in CPI inflation from 2.0% in June to 2.2% in July (consensus forecast 2.3%, Capital Economics 2.1%, Bank of England 2.4%) and the sharp fall in services inflation from 5.7% to a two-year low of 5.2% will reassure the Bank that underlying inflation is fading and opens the door to more interest rate cuts later this year.
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