// UK inflation jumped to its highest level for four months in July, says ONS
// Fashion retailers holding off from steep discounts after lockdown played a part in driving inflation
UK inflation jumped to its highest level for four months in July as fashion retailers held off from steep discounts after lockdown, official figures have shown.
The ONS said Consumer Prices Index (CPI) inflation lifted unexpectedly to one per cent in July from 0.6 per cent in June.
This was far higher than expected, with most economists predicting the figure would stay flat at 0.6 per cent for the month.
The Retail Prices Index (RPI), another measure of inflation, also surged last month, to 1.6 per cent compared to 1.1 per cent in June.
RPI is used to calculate the cap on annual rail season ticket price increases in Britain, meaning commuters face an increase in season ticket prices of 1.6 per cent despite people being urged to return to workplaces.
Fares are usually increased every January, although there is speculation ministers are considering delaying the 2021 rise due to low passenger numbers.
The ONS said the leap in CPI came after petrol and diesel prices soared higher due to a rebound in global oil prices and as lockdown restrictions have eased worldwide.
A much smaller fall in the cost of women’s fashion last month compared with a year ago also drove the hike in the cost of living, with retailers holding off from the traditional hefty summer sales after reopening from lockdown.
The ONS data showed that fashion retailers refrained from widespread discounting, having already slashed prices at the start of lockdown.
While price tags were cut, the fall was far lower than a year earlier, with women’s clothing prices down by 1.7 per cent between June and July, compared with 4.4 per cent a year ago.
Clothing and footwear prices are usually slashed each year between June and July as retailers look to shift summer stock ready for the arrival of autumn ranges.
Meanwhile, the CPI including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 1.1 per cent last month, up from 0.8 per cent in June.
Economists said the big leap in inflation was also down to the ONS’s decision to return to collection prices for services that were unavailable during lockdown, with inflation set to fall back again over the year ahead.
with PA Wires