Economics Weekly by Lloyds TSB

In July, UK price inflation was well above financial market expectations, recording a 1.8% annual print, significantly higher than the consensus estimate of 1.5%.

UK price inflation: ‘sticky’ but set to fall further

UK consumer price inflation stubbornly high…

In July, UK price inflation was well above financial market expectations, recording a 1.8% annual print, significantly higher than the consensus estimate of 1.5%. The ‘core’ rate, which excludes food, energy, tobacco & alcohol, rose to 1.8% from 1.6% in June, while both key measures of retail price inflation were also higher at -1.4% (RPI) and 1.2% (RPIX). Although the latest data contrast with the view from the Bank of England that inflation will slow in the near-term (largely due to base effects such as past hikes in utility prices falling out of the annual comparison), the Inflation Report also noted that the monthly profile was likely to be unusually volatile in H2 2009. Month-on-month rates for CPI, core CPI, RPI and RPIX were all unchanged in July compared to June, against expectations of falls of around 0.3%.

Full Report