UK inflation falls for a second month in a row

After the past year of economic instability brought on by inflation, todays figures published by the Office of national statistics (ONS) are a sign of better times to come in due course.

The ONS announced that inflation has decreased to 6.8%, meaning for a second month in a row, the nations economy has seen a dip in inflation. This news comes just two weeks after the Bank of England set out its plan to increase interest rates in the hopes of slowing the rate of inflation. Andrew Bailey predicted that these measures will insure inflation continues to fall in the coming months.

Oliver Rust, head of product at independent inflation data aggregator truflation, commented that, “Today’s inflation release from the ONS confirmed what the market had been hoping that CPI did, indeed, drop significantly by 1.1% to 6.8% in July - down from 7.9% in June and in line with the Bank of England’s expectations.

“Our data reflects this monthly trend but suggests inflation in the UK may be starting to tick up once again. While truflation’s independent real-time UK consumer price inflation index showed a decline in annual inflation from an average of 13.3% in June to 11.5% in July, we saw signs of an upward trajectory throughout last month.

“Despite a slight rise in unemployment from 4% to 4.2% in the three months to June, the goods and services sectors alike are seeing price rises as a result of the tight labour market. With ongoing strikes across a wide range of sectors, salaries are also expected to increase, which in turn will apply significant pressure to the economy.”

Simon Massey, managing partner at accountancy firm, Menzies LLP, said: “This further drop in the inflation rate (from 7.9% in June to 6.8% in July) could indicate that inflation has peaked, but businesses and mortgage payers are unable to celebrate, as prices are still going up and interest rates seem likely to remain elevated for a while yet.

“Businesses have had to withstand prolonged periods of high interest rates before many will recall that the base rate was at 5.25% back in 2008 and had been around that level for many years before. We all must remind ourselves how to manage our way in this more challenging climate and accept that rising prices and a higher cost of borrowing are likely to be around for a while yet.”

By Mark Adair – Correspondent, Bdaily

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