Official figures reveal that Inflation rose last month from 2.4% to to 2.5% .
Main points from the report show:
- The Consumer Prices Index including owner occupiers’ housing costs (CPIH) 12-month inflation rate was 2.3% in July 2018, unchanged from June 2018.
- Rising prices for computer games and transport fares produced the largest upward contributions to change in the 12-month rate between June and July 2018, although computer game prices tend to be highly variable from month to month.
- The upward effects were offset by falls in prices for clothing and footwear, and the removal of initial charges for investment in some unit trusts.
- Prices for clothing and footwear fell by 0.4% between July 2017 and July 2018, the first time the 12-month rate has been negative since October 2016.
- The Consumer Prices Index (CPI) 12-month rate was 2.5% in July 2018, up from 2.4% in June 2018.
- The Consumer Price Index (CPI) rose to 2.5% in July, up from 2.4% in June, the first rise recorded since November 2017, said the Office for National Statistics.
Mike Hardie, head of inflation at the Office of National Statistics says: “Transport tickets and fuel, along with often erratic computer game prices, drove up costs for consumers.
“On the other hand, there was a drop in prices for women’s clothing and footwear, and some financial services.”
The recently introduced sugar tax is thought to have impacted on the cost of inflation as this has added to the cost of foods and soft drink since it came in in April. Also holidaymakers felt the pinch with a rise in transport prices as they embarked on summer holidays, with prices climbing by 5.7% compared with the same month a year before.
Sterling was also broadly flat against the dollar and euro following the news, holding steady at 1.27 US dollars and 1.12 euros.
Meanwhile the controversial Retail Prices Index (RPI) fell to 3.2%, down from 3.4% in June, and lower than the 3.5% economists were expecting.This figure is closely-monitored by commuters and consumer groups, as it is used by the Department of Transport to calculate the yearly increase in rail fares.
As such, rail fares will rise by 3.2pc as of January, based on the latest measure of price growth.
Commenting on the inflation rise news, Tej Parikh, Senior Economist at the Institute of Directors, says: “These figures show that the cost of living squeeze is not yet a thing of the past.
“The downward momentum we saw in prices earlier this year appears to be petering out, while high oil prices and hikes in utility bills have kept inflation elevated in recent months.
“For households this isn’t good news, as the already weak growth in their pay packets is being further eroded by high prices. This is likely to weigh down consumer spending, posing fresh problems for embattled high street businesses.