Compared on monthly basis, the overall prices of consumer goods and services in July witnessed a marginal increase of 0.8 percent against the previous month.
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The dramatic post-Brexit slump in the pound has boosted United Kingdom inflation to its highest level since 2014 – and consumer prices could rise even more swiftly from here.
“Looking ahead, CPI inflation likely will exceed 1pc by November, as the anniversary of sharp falls in commodity prices is reached and sterling’s decline continues to push up food prices”, said Samuel Tombs at Pantheon Macroeconomics.
Mike Prestwood, head of prices at the ONS, said: “The Consumer Prices Index has continued in July its recent slow upward trend since late 2015, with transport costs the biggest single factor this month”.
“The recent recovery of oil prices combined with mounting downward pressure on sterling means the pickup in United Kingdom inflation is going to be sharper than on our previous forecasts, even if signs of the pickup are still mixed in today’s first official post-referendum data”. In the 12 months through July, the CPI rose 0.8% after increasing 1% in June. Potato, a daily consumable vegetable, saw the price rise during the month at 58.78%.
But think-tank the National Institute of Economic and Social Research (NIESR) estimated that GDP fell by 0.2% month on month in July following the vote. The larger gain was in the core CPI reading, outside of food and energy, where July’s prices rose 2.2% from a year earlier. “However, with core inflationary pressures remaining very muted, in line with the enduring softness of wage growth, we expect inflation to peak at three per cent”. The Fed raised its benchmark overnight interest rate in December for the first time in almost a decade. This is the lowest reading since January 2009. That means it reflects the full effect of the U.K.’s vote to leave the European Union on the country’s economy, something being closely watched by the Bank of England.
The second major economic report, from the Commerce Department, said July housing starts increased 2.1 percent, showing that the housing recovery is still in good shape. Economists in Reuters and Bloomberg surveys had expected the rate to stay at 0.5%. A 4.7% fall in gasoline costs and a 0.2% decline in grocery items offset higher prices for shelter and medical care.
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United Kingdom inflation increased slightly in July to the highest since November 2014, data from the Office for National Statistics showed Tuesday. Food prices were unchanged, but the cost of food consumed at home fell 0.2 percent.
