Inflation drops after recent rises

Inflation dropped to 2% CPI (consumer prices index) in the year to July, according to the Office for National Statistics (ONS), down from 2.5% the month before, and the first decrease since February. Despite the unexpected dip economists predict that it will resume its rise later in the year. The RPI (retail prices index) rate reduced slightly to 3.8% from 3.9%.

CPI is now in line, albeit probably temporarily, with the Bank of England's 2% inflation target. The reduction was driven by price falls in clothing and footwear. The consumer prices index including owner occupiers’ housing costs (CPIH) rose by 2.1% over the same period, down from 2.4%. The largest upward contribution to the CPIH rate came from transport costs (0.85 percentage points). Average petrol prices reached 132.6 pence per litre in July, compared with 111.4 pence per litre a year earlier.

Responding to the figures, TUC general secretary Frances O’Grady said: “The chancellor’s decision to hold down pay in the public sector means prices are rising faster than wages for lots of our key workers."

https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/july2021

https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation

https://www.tuc.org.uk/news/inflation-chancellor-making-key-workers-poorer-holding-down-pay