Morgan Stanley economists say domestic inflation pressures in the UK appear less severe than headline CPI suggests. July CPI rose to 2.9% from 2.6% in June, but services inflation slowed to 3.4% YoY from 3.6% and private‑sector wage growth remains weak as core services inflation decelerates. A competitive retail environment is limiting pass‑through to food prices. While a persistent energy shock could raise indirect and second‑round inflation risks, weaker wages and mild services inflation are l

Morgan Stanley economists say domestic inflation pressures in the UK appear less severe than headline CPI suggests. July CPI rose to 2.9% from 2.6% in June, but services inflation slowed to 3.4% YoY from 3.6% and private‑sector wage growth remains weak as core services inflation decelerates. A competitive retail environment is limiting pass‑through to food prices. While a persistent energy shock could raise indirect and second‑round inflation risks, weaker wages and mild services inflation are likely to absorb most of the pressure.