You are here: Home - Investing -

UK CPI inflation falls to 1.6% in year to July

Written by:
UK consumer price inflation assumed its downwards trajectory once more in July following a sharp spike the previous month.

UK CPI grew by 1.6 per centin the year to July, compared to a rise of 1.9 per cent in the year to June, and 1.5 per cent in the year to May.

The Office for National Statistics (ONS) said falls in clothing prices provided the largest contribution to the fall in the rate. Other large downward effects came from the alcohol, financial services and food & non-alcoholic drinks product groups.

The largest, partially offsetting, upward effect came from the transport group.

CPIH, a measure of CPI which includes homeowner costs, grew by 1.5 per cent in the year to July 2014, down from 1.8 per cent in June.

The ONS noted CPIH has lost its status as a national statistic pending work to improve it as a measure.

Meanwhile, RPI grew by 2.5 per cent and RPIJ grew by 1.8 per cent, down from 2 per cent in June.

These latest statistics are likely to add weight to Mark Carney’s statement earlier this month that “now is not the time to raise interest rates”.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said inflation at current levels “is unlikely to put pressure on Mark Carney to become a ‘reliable boyfriend’ when it comes to interest rate policy.”

“As long as inflation remains benign, the central bank will also have leeway to raise interest rates slowly and gradually, when they decide the time has come to do so.”
Jeremy Cook, chief economist at World First, added the data will offer some relief to policymakers.

“For the majority of the Bank of England’s Monetary Policy Committee, this figure will come as a bit of a relief. No policymaker would want to be caught between the rock and the hard place of a decision between heading off an inflation number running higher and a wage picture that is seeing pay fall in both real and nominal terms,” he said.

“The unemployment rate can easily come lower before inflation pressure pick up and, with that inflation outlook, we can easily see the Bank of England holding off on a normalisation of monetary policy into Q1 of next year.

“Sterling has continued its recent poor performance and is down 0.45 per cent against the USD and 0.37 per cent against the EUR immediately after the figure.”

Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • Cost of taking a mortgage holiday revealed: The average cost of a 3 month #mortgagepaymentholiday is £665.08, and…
  • RT @BlackstockPR: "The government needs to grasp that mounting rent arrears are a serious economic issue that will impact many buy-to-let l…
  • "The government needs to grasp that mounting rent arrears are a serious economic issue that will impact many buy-to…

Read previous post:
FTSE 100: This morning’s risers and fallers

UK stocks rose for a fifth straight day on Tuesday, helped by easing geopolitical tensions in Ukraine.