The Labor Department said its consumer price index edged up by 0.1 percent in July after climbing by 0.3 percent in June.
Advertisement
The core infation figures do not include the prices of food, petrol and energy and non-alcoholic beverages.
Bank of England Governor Mark Carney will now have to write an open letter to the Chancellor of the Exchequer, George Osborne, as inflation is more than a percentage point below the central bank’s target of 2.0%.
It adds that the recent fall in oil price has not been fully reflected in prices yet and that gas suppliers are expected to slash their prices in the near future, following British Gas’s announcement that it will cut prices by 5 per cent.
“Data dependence” – perhaps not tier 1, the still-important Empire State Manufacturing Index was the worst reading since March 2009 and drastically missed its expected rise of 5.0 by falling 14.9 index points.
Consumer price inflation ticked up 0.1 per cent in July year-on-year after slipping back to zero in June.
The pound rose against the dollar after United Kingdom inflation unexpectedly accelerated and a core measure of price growth jumped to a five-month high.
Housing charity Shelter said the average house price is now £12,000 more than this time last year and called for the Government to build more affordable homes.
Richard Campbell, ONS Head of CPI, said: “This is the sixth month running that headline inflation has been at or very close to zero”. Additional support for interest rate hike speculation is likely to increase the gains of the GBP/USD pairing, but if the figures fail to reflect an improving economic climate there could be significant losses in store.
Hargreaves Lansdown senior economist Ben Brettell says: “The rise in the core figure suggests that underlying inflationary pressures could be building in the economy and is possibly the clearest indication yet that the Bank of England might have to raise interest rates sooner rather than later”.
Sterling rose as financial markets weighed the likely timing of the first rise in UK base rates from their record low of 0.5 per cent in the wake of the stronger-than-forecast inflation data.
Advertisement
Clothing prices have been named as the main influence of Britain’s rising inflation rate last month.
