IF: UK inflation ticks up in July, core inflation hits five-month high
This figure, which strips out volatile components like food and energy, jumped sharply to 1.2%, confounding expectations for it to remain flat at 0.8%.
Food and drink prices rose 0.9 percent, driven mainly by a 2.8-percent increase in prices at restaurants and bars.
Analysts had expected consumer prices and the core index to rise 0.2%.
Food prices were up 0.2 per cent last month and rose 1.6 per cent from a year earlier.
A key price gauge that the Federal Reserve monitors has been running below its 2 percent target for inflation for the past three years.
The Fed’s preferred measure of price pressures, linked to consumer spending, climbed by 0.3 percent in June from a year before.
Danske Bank chief economist Angela McGowan said inflation was expected to stay low for the rest of the year and then pick up in January though that rise would be smaller than previously anticipated.
Annual UK house price inflation picked up slightly to 5.7% in the year to June, official figures show. Policy makers have said it will remain low in the short term because of the strength of the pound and a renewed decline in oil prices.
Maike Currie, associate investment director at Fidelity Personal Investing, said the marginal rise in inflation “puts the rate rise debate back on the table”.
A year later, gasoline costs may be stabilizing, peaking for the summer in mid-July at $2.92 for a gallon of regular and declining modestly since then, according to the U.S. Energy Information Administration. In addition, air fares were on the increase which rose more sharply in July year-on-year despite considerably lower oil prices in 2015.
July’s gain was by rising shelter costs, homes and apartments, up by 0.4% on the base reading but up 3.1% from a year ago. Airline prices fell 5.6 per cent in July, the largest decrease since December 1995.
It’s a crucial data point that comes ahead of the Federal Reserve’s September meeting, when many market participants believe the FOMC could raise rates for the first time in a decade. When combined with a stronger dollar and slower growth overseas, the energy slump will make the Fed’s price goal even more elusive.
