Economics

The inflation warning lights continue to flash, with July’s rate being slightly higher than most analysts had forecast.

Better than expected data for both Q2 and the month of June are welcome – but the numbers mask the underlying pain being felt by businesses across the UK.

Businesses will welcome the decision to cut the base rate to 4%, marking a further move away from a prolonged period of elevated borrowing costs.

With CPI rising by 3.6% in June the daily inflation headache for businesses should not be underestimated.

Today’s GDP figures, showing growth of 0.5% in the three months to May, but a fall of 0.1% in the month, reinforce the view that UK growth remains fragile, lacking sustained drive.

Yesterday’s CPI data confirmed that inflation remains stubbornly high, so today’s decision by the Bank of England to hold interest rates at 4.25% comes as no surprise.