The Consumer Price Index rate of inflation stayed the same at 2.6 per cent throughout July, the Office for National Statistics has reported.

The recently introduced CPIH measurement, which includes owner occupiers’ housing costs, also remained the same at 2.6 per cent. The ONS said the price of motor fuel continued to fall and provided the largest downward contribution to change in the rate between June 2017 and July 2017.

However, this was offset by smaller upward contributions from a range of goods and services, including clothing, household goods, gas and electricity, and food and non-alcoholic beverages.

The Retail Price Index increased from 3.5 per cent in June to 3.6 per cent in July.

Commentating, Hargreaves Lansdown senior economist Ben Brettell said that it now looks possible that inflation has peaked, and will fall back further in the coming months. “The year-on-year increase in producers’ raw material costs fell to 6.5 per cent in July – undershooting forecasts for a 7.0 per cent rise. This was down from 10 per cent in June, the biggest month-to-month slowdown in almost five years.

“Input prices are a leading indicator for consumer price inflation as higher input prices are often ultimately passed on to the consumer, and therefore a lower number here could bode well for softer consumer prices down the line.”

In addition, Royal London Asset Management economist Ian Kernohan said: “While there is still some residual impact of sterling devaluation to feed through, with underlying inflationary pressures low, we think that CPI is close to topping out for the immediate future. In their latest Inflation Report, the Bank of England forecast inflation to peak at 3 per cent in the autumn, and will be happy to keep interest rates on hold as a result.”

Share Story: