Inflation is expected to have increased for the first time this year in a blow to Sir Keir Starmer after his first month in power.
The Office for National Statistics will reveal its latest consumer prices index for July on Wednesday, which economists expect will show that prices grew at an annual pace of 2.3pc.
Inflation has held at the Bank of England’s target of 2pc since May, giving the Bank of England confidence to cut interest rates for the first time in four years earlier this month.
However, the next inflation data could throw hopes of future cuts in doubt, particularly if services inflation is stronger than expected, with money markets currently pricing in at least one more rate reduction by the end of the year.
Catherine Mann, an external member of the Monetary Policy Committee which sets interest rates, said the UK should not be “seduced” into thinking inflation will stay low over the coming year.
Ms Mann, a former OECD chief economist, was one of four policymakers who voted to leave rates unchanged at the last meeting, at 5.25pc, a 16-year high.
“Inflation has come down but… we shouldn’t be seduced by headline inflation because of the role of energy and external aspects working through,” she told the Financial Times.
She said survey evidence suggests companies expect to increase wages and prices, which indicates she will be “looking at a problem for next year”.
Elizabeth Martins, UK economist at HSBC, said: “We see no urgent case for a follow up rate cut.”
