UK inflation slows in July

CPI annual inflation – the Government’s target measure – was 3.1 per cent in July, down from 3.2 per cent in June, according to the Office for National Statistics (ONS).

Transport costs produced the largest downward pressure to the change in CPI inflation between June and July. This was mainly due to the price of second-hand cars falling between June and July this year but rising over the same period a year ago; the price increase of 3.0 per cent last year was a record for a June to July period. There was also a downward effect from petrol with prices falling by 0.7 pence per litre between June and July this year but rising by 1.1 pence per litre a year ago.

Other large downward pressures came from:

clothing and footwear where prices, overall, fell by 4.9 per cent this year, the largest fall for a June to July period since 2002 with the main downward effect coming from women’s outerwear

miscellaneous goods and services where prices, overall, fell this year but rose a year ago, particularly for financial services

recreation and culture with small downward effects observed across a wide range of these goods and services

The largest upward pressures to the change in CPI inflation came from:

a variety of food and non-alcoholic beverages with the single largest upward effect from vegetable prices

furniture, household equipment and maintenance where prices, overall, fell by less than a year ago, particularly for carpets and rugs

In the year to July, RPI annual inflation was 4.8 per cent, down from 5.0 per cent in June. The main factors affecting the CPI also affected the RPI.

RPIX inflation – the all items RPI excluding mortgage interest payments – was also 4.8 per cent in July, down from 5.0 per cent in June.

As an internationally comparable measure of inflation, the CPI shows that the UK inflation rate in June was above the provisional figure for the European Union. The UK rate was 3.2 per cent whereas the EU’s as a whole was 1.9 per cent.