UK inflation accelerates more than expected to 3.8%, highest since early 2024Some economists now expect interest rates to be on hold this year, while the EY Item Club forecasting group says November is a ‘close call’.Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics, said:All told, July’s consumer prices report showed headline inflation matching the monetary policy committee’s (MPC) forecasts, as outlined in the August monetary policy report (MPR).Services inflation exceeded the MPC’s expectations, but that jump in services consumer prices index (CPI) was partly driven by a sharp move in the erratic airfares component, which could unwind in August’s data. That said, the doves on the MPC have taken a battering over the past week. July’s figures show sticky underlying services inflation and are another blow to those on the MPC that argued hard at the August meeting about the disinflationary process being underway.Base effects mean CPI inflation is likely to edge up further over the next couple of months and peak in September. Subsequently, inflation should cool gradually. The positive contribution from the energy category is expected to fade towards the end of this year and into next. Meanwhile, food price inflation should slowly cool, as the impact of stronger sterling gradually feeds through. Though services inflation is likely to remain sticky in the near-term, it will start to soften next year, as pay growth continues to cool and the impact of businesses passing on this year’s increase in employers’ National Insurance Contributions (NICs) fades.In the minutes of its August meeting, the MPC sent a clear message that inflation was its priority again. However, there wasn’t much in today’s release that should add to the committee’s concerns, with headline inflation in line