LONDON, July 25 Reuters British industrial output grew at the slowest pace in over a year in the three months to July, but there are tentative signs that some challenges around inflation and investment are easing, a Confederation of British Industry survey showed on Monday.

The Bank of England39;s Monetary Policy Committee MPC must decide next week whether to speed up the pace of interest rate rises with a rare halfpoint rate rise to tackle the highest inflation in 40 years.

Surging inflation has driven consumer sentiment to its lowest since records began in the 1970s, but business activity has been slower to weaken.

Monday39;s CBI Industrial Trends Survey output balance dropped to 6 for July from 19 in April, its lowest since the three months to April 2021 but still above its longrun average of 2.

The manufacturing sector has been an economic bright spot in recent months, but output and orders have softened amid ongoing cost pressures, supply challenges and a generalised weakening in economic conditions both in the UK and globally, CBI deputy chief economist Anna Leach said.

The monthly CBI industrial orders balance dropped to 8 from 18, its lowest since October but above its longrun average of 13,

Quarterly inflation expectations a key concern for the BoE as it judges how long high inflation will last dropped sharply to 48 from April39;s record high of 71.

A wider CBI measure of manufacturers39; optimism improved from a twoyear low touched in April but…