Inflation rises despite weak state of economy
Inflation has continued rising, despite the weak state of the economy.
The rate, as measured by the Government’s preferred Consumer Price Index (CPI), rose in July up to 4.4% — more than twice the official target rate.
But all the members of the Bank of England’s Monetary Policy Committee voted against a base rate increase at their last meeting, because of the impact of a hike on businesses’ lending costs and economic activity.
Upward pressure on inflation was felt across a variety of sectors. The largest contribution came from the financial services industry, where mortgage arrangement fees rose strongly during the past year. Housing rents also increased significantly, reflecting changes in government policy affecting social landlords.
Summer inflation rates are usually held down because of lower costs in the clothing, footwear, furniture and household equipment sectors, but prices fell by a lower amount this year than is normal.
Food and non-alcoholic drinks rose by only 0.3%, against 1% last year, while the price of bread and cereals rose by 1.5% in June and July.
Using the now unfashionable Retail Price Index measure, inflation has continued at the higher rate of 5%.
European inflation, using the CPI, is running at 3.1 %.