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On July 22, ING economist James Smith pointed out in a report that the global shortage of memory chips, driven by a surge in AI demand, is affecting inflation in the UK. Although the overall inflation rate fell to a 15-month low in June, the core inflation rate remained slightly higher than expected, indicating that 'chip inflation' is already impacting the UK. Notably, the prices of portable devices surged by 22% month-on-month, marking the largest increase since data records began in 2015. However, given the easing of food and service inflation, the likelihood of the Bank of England raising interest rates in the short term is low. It is expected that the Bank of England will maintain interest rates until 2026, after which it may gradually cut rates starting from next spring.
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