United Kingdom: Inflation unexpectedly picks up in July
August 20, 2012
In July, consumer prices added 0.1% over the previous month, which contrasted both the 0.4% price decline observed in June and market expectations that had prices falling 0.1%. The higher-than-expected price rise was the result of higher prices for transport, which increased 1.0% month-on-month amid a 21.7% climb in air fares that was only partly offset by lower motor fuel prices. Building on the monthly rise, annual headline inflation rose from 2.4% in June to 2.6% in July, which surprised market analysts that expected inflation to fall to 2.3%. Nonetheless, the trend continues to point downwards, with annual average inflation moderating from 3.9% in June to 3.7% in July. Based on figures from its latest inflation report from August, the Bank of England expects inflation to average 2.7% this year, before moderating to 2.1% next year.