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UK inflation unexpectedly accelerates to 2.1% in July, surpassing BoE target

Consumer prices in the U.K. climbed 2.1% year over year in July, surpassing the Bank of England's inflation target, after registering a 2.0% increase in June, data from the Office for National Statistics showed.

The reading beat the consensus estimate of economists polled by Econoday which was for a 1.9% annual growth.

The country's consumer prices index, including owner occupiers' housing costs, increased by 2.0% year over year in July, from 1.9% in June.

The largest upward contribution to the index was again from household services in July but with a 1.9% annual increase in prices after a 2.1% rise in June. Transport services posted a downward trend with prices falling 0.12 percentage point.

"The domestic inflation backdrop suggests that UK rate cuts are unlikely to be forthcoming in the near-term although, as ever, everything depends on Brexit and where things stand after 31 October," James Smith, developed markets economist at ING, said in a note.

Meanwhile, annual producer prices in the U.K. climbed 1.8% in July, up from the 1.6% increase recorded in June and beating the Econoday consensus estimate of a 1.7% annual growth.

On a monthly basis, producer prices increased by 0.3%, compared with a 0.1% decline recorded in June.