Core Viewpoint - UK inflation pressure has surged again, with July's Consumer Price Index (CPI) rising 3.8% year-on-year, marking an 18-month high and making the UK the fastest-growing major developed economy in terms of price increases [3][4]. Inflation Drivers - The primary drivers of the CPI increase are transportation and energy sectors, particularly a significant rise in airline ticket prices, which jumped approximately 30% due to peak summer travel. Additionally, fuel prices contributed 0.1% to the inflation rate, while hotel accommodation and soft drink prices also pushed the CPI higher [5][6]. Service Sector Inflation - The service sector's inflation rate rose to 5.0% in July, up from 4.7% in June, indicating strong domestic inflationary pressures. The core inflation rate, excluding volatile items like energy and food, also increased slightly from 3.7% to 3.8%. Food and non-alcoholic beverage prices rose 4.9% year-on-year, the highest since February 2024 [6][9]. Comparison with Other Economies - The UK's inflation rate is higher than that of other developed economies due to several factors, including regulatory lag in energy price adjustments and a tight labor market post-Brexit, which has led to persistent inflationary pressures. Nominal wage growth remains around 5%, contributing to a potential wage-price spiral [9][10]. Monetary Policy Implications - Following the inflation data release, the British pound strengthened slightly, indicating investor expectations for the Bank of England to maintain a tight monetary stance for a longer period. The central bank faces a dilemma between preventing inflation from rising further and considering the costs of excessive tightening amid weak economic growth [10][11].