Inflation rate slows

The rate at which prices are rising slowed in July, allowing earnings growth to make more of an impact on household budgets (see this page, right).

Retail Prices Index (RPI) inflation rose by 9.0%, down from 10.7%. The CPI Consumer Prices Index rose by 6.8%, down from 7.9%, or 6.4% (down from 7.3%) with a housing element (CPIH).

However, “core” inflation did not fall, and a further rise in the cost of borrowing appeared likely.