Last month’s rate – which determines the rise in train tickets next year – was a rise of 0.6 per cent, up from 0.5 per cent in June.
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The Office for National Statistics has published its latest inflation report covering the period after the European Union referendum showing CPI increasing to 0.6%. And the slowdown in inflation growth could add to concerns about slow economic growth and lead Fed policymakers to hold off on raising a key interest rate at their next meeting in September.
ONS statistician Mike Prestwood said while there’s “no obvious impact” yet on headline inflation from the June 23 vote, producer-prices “suggest the fall in the exchange rate is beginning to push up import prices faced by manufacturers”.
UK Consumer Price Index figures due out later are expected to show the inflation rate stayed at 0.5% between June and July.
Mark Billige of pricing specialist Simon-Kucher said: “We have now seen more than two years of falling year-on-year prices for food and non-alcoholic drinks, and this month was no exception, indicating the fierce supermarket price war still rages on”.
The Fed has a 2 per cent inflation target and tracks an inflation measure which has been stuck at 1.6 per cent since March.
The core inflation gauge (excluding energy, food, alcohol and tobacco) eased a bit to 1.3 percent in July versus 1.4 percent last, in line with expectations. In a separate report, the Commerce Department said housing starts increased 2.1 per cent to a seasonally adjusted annual pace of 1.2 million units, the highest level since February. That was down from the 1 percent increase for the 12 months that ended June 30. Following the release, sterling gained ground against the dollar, rising 0.69% against the greenback to $1.2966.
Month-on-month data found CPI fell 0.1%, with a decline from the 0.2% increase in June having been expected.
Core inflation compared to the prior year has been running hot and above the Fed’s 2% target since last December. Transportation-related costs were weak. “As a result, we continue to think that CPI inflation will hit 3% in the second half of 2017”.
However, data on Tuesday that showed higher-than-expected inflation in Britain pointed to the impact on the United Kingdom economy from Brexit and a generally weaker sterling.
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“The UK’s strongly consumer-driven economic recovery is about to grind to a halt”, said Scott Corfe, director of the Centre for Economics and Business Research, as quoted by CNBC.
