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UK inflation fell to 2% in July, down from June’s nearly three-year high of 2.5%, but pushed up by gasoline prices reaching a high that wasn’t seen for nearly eight years. I did.
The National Bureau of Statistics (ONS) said the Consumer Price Index (CPI) is now in line with the Bank of England’s goals and has been lowered due to falling clothing prices due to summer sales.
According to ONS, the cost of entertainment products and services, especially routers, webcams and computer software, has also dropped.
Official figures fell short of analysts’ expectations, which were expected to rise to 2.3% this month.
This reading will ease concerns about the possibility of a surge in inflation, along with signs that recent high interest rates are easing.
This was after the United States announced its own CPI inflation rate of 5.4% last July, and some predicted it to rise.
The Bank of England has previously warned that inflation could reach 3% by the end of the year.
According to ONS, gasoline was the number one driver of rising inflation, with an average gasoline price of 132.6p per liter in July 2021 compared to 111.4p the previous year.
July prices are the highest since September 2013.
By comparison, Britain has broken out of its first national blockade at this point last year, and gasoline prices have begun to recover after a period of declining demand.
Used car sales also contributed to higher inflation, rising 6.6% at pre-pandemic levels, growing compared to a year ago when people were trapped in their homes because of the pandemic.
Due to the global shortage of computer chips used in vehicles, customers are looking to used cars rather than new ones.
Despite the chill in inflation, analysts still expressed concern about future pressures, suggesting that it could rise again later this year.
Yael Selfin, Chief Economist at KPMGUK, said:
“For the rest of the year, inflation will accelerate further, well above the Bank of England’s target of 2%, as the supply chain remains tense and faces a strong recovery in demand. . “
Recreation and culture have been the biggest downward contributors to inflationary changes, with reduced recording media and games, toys, and hobbies.
Package travel has also decreased slightly compared to a year ago.
Another indicator of inflation, the Retail Price Index (RPI), rose to 3.8%. July figures are typically used to calculate regulated rail fare increases.
The CPI, including the ONS-recommended inflation index, the consumer price index (CPIH), was 2.1% this month, compared to 2.4% in June.
Simon Neville
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