The latest figures, compiled and released by the Office for National Statistics, have shown that during July inflation rose to 2.6 percent, compared to 2.4 percent in June; with a 21.7 percent rise in the cost of flights which saw overall transport prices rise by one percent being one of the reasons cited for driving inflation up.
A rise in the Consumer Price Index (CPI) was met with a rise in the Retail Price Index (RPI), which saw an increase from 2.8 percent in June to 3.2 percent last month.
The latest figures come less than a week after the Bank of England lowered its inflation forecast in its latest quarterly report, suggesting that the annual inflation figure was likely to fall below the two percent target by the end of the year.
Despite the latest figures showing an unexpected rise, economists believe that the two percent target is still achievable, with July’s figures being a temporary blip. One economist has said of the latest inflation figures: “Today’s inflation report is not expected to be an obstacle for further policy action in the coming months, as CPI is still expected to remain below the two percent target in the medium term.
“All in all, today’s upswing in inflation is likely to be just a blip and the downward trend is expected to resume in August. Easing demand is expected to prevail in the coming months, with retailers left with very limited pricing power.”
For more information, speak to London Accountants Harris Lipman.
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