14 Aug

Inflation 'did not rise in July', says economist

Inflation 'did not rise in July', says economist

An economist has said the recent underlying trend in inflation is an indicator that the situation is not as bad as some may think, despite the rise in the consumer prices index (CPI) rate in July.

CPI climbed by a record monthly amount of 0.6 per cent to reach 4.4 per cent, the Office for National Statistics (ONS) revealed this week, but Charles Davis from the Centre for Economics and Business Research pointed out that it was not inflationary factors in the past month that were responsible.

He explained: "If you look at the actual month-on-month figures prices were flat in July, there was a 0.0 per cent growth in the consumer prices index for June and July."

What had caused the CPI increase was the fact that the same period in 2007 had actually seen a fall in prices, Mr Davis added.

The economist went on to predict that as the economy slows inflation will fall back.

Such a situation could enable the Bank of England to trim the base rate, which in turn could help lower mortgage costs.

A rise of 13.7 per cent in food costs has been one of the key reasons for the increase in CPI, the ONS stated when it revealed the figures.
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