Outlook for UK inflation rises on sterling slump

A gauge of UK inflation expectations climbed to its highest level of 2016, as the country’s Brexit decision and a slump in sterling helped push retail prices up in July faster than analysts had forecast.

The 10-year break-even rate, a market measure of expected inflation derived from yield difference between nominal and index-linked gilts, rose to 2.49%, exceeding the yearly high reached last week.

The so-called five-year forward inflation rate, among indicators monitored by the Bank of England, jumped to 3.13%, compared with its past month’s average of 3.03%.