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The answer to Britain’s July inflation rise

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Clothing prices have been named as the main influence of Britain’s rising inflation rate last month.

The Consumer Price Index (CPI) measure of inflation edged up to 0.1% in July from zero the month before, challenging expectations for no change and pushing the pound higher.

The Office for National Statistics (ONS) said clothing prices were the main factor behind the rise as shops offered fewer bargains in their summer sales.

Richard Campbell, ONS Head of CPI, said: “This is the sixth month running that headline inflation has been at or very close to zero. While households will have seen individual prices rise and fall, the overall shopping basket bought by the country remains little changed in price compared with a year ago.

“The latest slight increase is mainly due to clothing, with smaller price reductions in this year’s summer sales compared with a year ago. Food and motor fuel prices continue to fall and have helped stop a larger rise in the rate of inflation.”

Inflation has been below the central bank’s 2% target for 19 months and in April fell into negative territory for the first time in half a century.

Alan Clarke, Economist at Scotiabank in London, said: “The [Bank of England] are focusing more heavily on domestically generated inflation and core inflation – and there are two clear signs of upward pressure here – clothing and airfares.” 

Charlotte Brown

Published on Wednesday 19 August by Editorial Assistant
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