CPI inflation has dropped to 1.9 per cent in July, down from 2.4 per cent in June, according to the Office of National Statistics.
ONS says tbat the largest downward contribution came from food prices, as supermarkets led price cuts across a range of products including bread and cereals, meat, fish, fruit and vegetables. In addition, price increases last July on beef and shop bought milk were not repeated this year.
RPI inflation fell to 3.8 per cent in July, down from 4.4 per cent in June and was influenced by similar factors to those that affected the CPI. RPIX inflation – the all items RPI excluding mortgage interest payments – was 2.7 per cent in July, down from 3.3 per cent in June.
The CPI shows that the UK inflation rate is above the average for the European Union as a whole. The provisional inflation rate for the EU 27 in June was 2.1 per cent, compared with the UK rate of 2.4 per cent for the corresponding period.
Assetz plc chief executive Stuart Law says: “While the Bank of England have said it, and 33 economists surveyed by Bloomberg said it, any suggestion that today’s inflation figures were unexpected is nonsense.
“Today’s drop by the CPI to less than 2 per cent was in fact, easily predictable to anyone analysing the monthly CPI data and acknowledging that in July, in over 90 per cent of cases, it has a negative inflation rate. This July, inflation was recorded as -0.5 per cent but, in the past, we have seen it fall as low as -0.8 per cent in this month.
Law says the BoE is guilty of misleading and misguiding the industry, and the general public by “telling us inflationary pressures are a clear and present danger in order to justify rapid increases in interest rates, whilst at the same time knowing they were overreacting to short term changes in the market.”
Law adds that he expects the next interest rate move to be downwards.