Inflation drops to 1. 6 per cent as summer sales drive prices down
Official figures published this morning showed the consumer prices index, the government's pet measure of inflation, fell to 1.6 per cent in the year to July, down from 1.9 per cent in June and way below the 1.8 per cent expected by analysts.
The fall was mainly down to clothing prices, which dropped 5.7 per cent between June and July, compared with a drop of 3.2 per cent during the same period a year earlier. The Office for National Statistics did point out that the annual round of summer discounting happened later than usual this year because of the good weather, however.
Upward pressure came from transport prices – specifically, second-hand cars and sea transport – which grew 1.3 per cent between June and July, compared with a rise of 0.9 per cent last year.
The retail prices index, another measure of inflation which includes housing costs like mortgage interest payments and council tax, fell to 2.5 per cent in the year to July, from 2.6 per cent in the year to June, suggesting falling house- and rental prices are easing pressure on homeowners.
The figures may not be good news for Mark Carney, who has a CPI target of 2% to aim for – but it is good for squeezed consumers, who are still struggling with low wages. Figures out last week showed wages fell 0.2% in the three months to June.