British inflation rate rises to 2.5% in July

The inflation rate in Britain has picked up, keeping a squeeze on households facing the uncertainty of Brexit.

Official figures released Wednesday show that consumer prices were up 2.5% annually in July, up from June’s 2.4% rate. That remains above the Bank of England’s target of 2% and helps justify the central bank decision earlier this month to raise interest rates for only the second time since the global financial crisis.

Read: BoE raises interest rate in face of Brexit strife

The rise in inflation will limit an increase in real wages, keeping pressure on household spending in the crucial last months of Brexit negotiations. The talks for Britain to leave the European Union have stalled, and there are concerns the country could crash out without a deal on future relations, hurting commerce and the wider economy.

Until there’s more clarity on the direction of Brexit talks, the Bank of England will likely hold off on further tightening, said RBC in a markets report released last week. For now, RBC forecasts another rate hike early in 2019.

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Staff, with files from The Associated Press

The Associated Press is an American not-for-profit news agency headquartered in New York City.