United Kingdom Inflation

United Kingdom

Inflation steps up in July

In July, consumer prices remained flat over the previous month, contrasting the 0.1% decline in June. Most of the upward pressure came from increasing transport prices as well as prices in the housing and household services categories. On the other hand, clothing and footwear prices eased in July due to the summer sales. Owing to the unfavourable comparison base last year, annual headline inflation edged up from 4.2% in June to 4.4% in July, which exceeded market analysts' expectations of a 4.3% increase. The elevated rate of inflation mainly stems from higher global commodity prices as well as past VAT rate hikes. Moreover, inflation is expected to further accelerate in August on the back of higher utility prices announced for 18 August. According to its Inflation Report from August, the Bank of England projects inflation to average 4.6% this year and to moderate to 3.1% in 2012.


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