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Inflation stays at 2.6% as food rises but fuel drops

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Food prices helped push up inflation notching 0.1% higher on the month in July following a fall of 0.2% over the period last year. Photo: Julien Behal/PA

Food prices helped push up inflation notching 0.1% higher on the month in July following a fall of 0.2% over the period last year. Photo: Julien Behal/PA

PA

Food prices helped push up inflation notching 0.1% higher on the month in July following a fall of 0.2% over the period last year. Photo: Julien Behal/PA

Consumer price inflation - which measures the cost of typical household goods - has held steady at 2.6% after hitting a near four-year high earlier this year. The Office for National Statistics (ONS) confirmed that Consumer Price Index (CPI) inflation held steady at 2.6% in July, as a drop in fuel prices offset the rising cost of food, clothing and household goods.

The pause comes as CPI slipped back to 2.6% in June after soaring to a near four-year high at 2.9% in May.

Dr Esmond Birnie of Ulster University's Economic Policy Centre said: "Consumer price inflation remaining unchanged at 2.6% in the year to July (same as in June) means that we are likely to be some time away from any increase in Bank of England interest rates.

"At the same time, a price increase of 2.6% annually is still above the annual wage increase for many people."

He added: "While there are some indications that economic growth in the Northern Ireland economy is slowing down, today's figures from the Northern Ireland Statistics and Research Agency (NISRA) show continued moderate house price growth of 4.4% in the year to quarter two."

Sterling, already under pressure amid political confusion over Brexit, dipped on the news. The pound was trading 0.3% lower against the dollar at 1.29 and 0.1% lower verses the euro at €1.09.

Households have also seen their spending power come under sustained pressure from lacklustre wage growth and higher inflation, triggering an increase in credit and a decline in savings overall.

The ONS said the main downward impact on the cost of living last month came from a drop in fuel prices, which sank by 1.3% between June and July after growing by 0.7% over the period in 2016.

Petrol fell by 1.4p month on month to 113.9p per litre, while diesel slipped by 1.7p to 115.6p per litre.

The decline was countered by food prices notching 0.1% higher on the month in July following a fall of 0.2% over the period last year.

It was largely driven by meat and other items such as sauces, which became more expensive, the ONS said.

Clothing and utility bills were also putting upward pressure on CPI, with electricity, gas and other fuels lifting 0.8% between June and July after flat growth over the period in 2016.

Belfast Telegraph