// Inflation cooled in July to 2%, compared to 2.5% in June
// This was attributed to a fall in fashion prices amid summer sales
// The RPI increased to 3.8%
The UK’s rate of inflation cooled in July to two per cent, down from near three-year highs of 2.5 per cent in June, due to a fall in fashion prices as summer sales took place.
The ONS said the Consumer Prices Index (CPI) is now in line with the Bank of England’s target.
The cost of recreational goods and services also fell, particularly the cost of routers, web cams and computer software, the ONS said.
- Grocery sales dip 4% as customers return to pre-Covid shopping habits
- Retailers face goods shortages ahead of Christmas
Official figures undershot the expectations of analysts, who had predicted that it would rise to 2.3 per cent for the month.
The reading will ease concerns over the potential for soaring inflation with signs the recent high rates are easing.
The Bank of England has warned previously that inflation could hit three per cent by the end of the year.
The ONS said petrol was the biggest contributing factor to inflation rising, with average petrol prices at 132.6 pence per litre in July 2021, compared with 111.4 pence per litre a year earlier.
The July price is the highest recorded since September 2013.
In comparison, the UK was coming out of the first national lockdown at this point last year and petrol prices were starting to recover after a period of reduced demand.
Second-hand car sales also contributed to the inflation rise, which are up 6.6 per cent on pre-pandemic levels and have grown compared with a year ago when people were stuck at home due to the pandemic.
The largest downward contribution to the inflation change was recreation and culture, with recording media and games, toys and hobbies down.
The Retail Price Index (RPI), a separate measure of inflation, increased to 3.8 per cent – the number in July is typically used to calculate rises in regulated rail fares.
The CPI, including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 2.1 per cent for the month, compared with 2.4 per cent in June.
with PA Wires