Surprise rise for inflation in July

The rate of consumer prices index (CPI) inflation rose to 0.1 per cent year-on-year in July, up from zero the previous month, official figures showed today.

Clothing prices helped inflation rise last month
Clothing prices helped inflation rise last month

Economists had expected the CPI measure to remain at zero, or even fall into negative territory.

The Office for National Statistics said a smaller fall in clothing prices compared with a year ago was the main contributor to the rise in inflation.

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It added: “Falling prices for food and non-alcoholic beverages partially offset the rise.”

Peter Cameron, associate fund manager at EdenTree Investment Management, said: “This morning’s inflation figures are higher than expected but could easily fall back next month.

“Brent crude has dropped below $50 a barrel and China, the world’s largest exporter, is potentially now unleashing a new wave of deflationary forces around the world through the devaluation of its currency.”

He added: “In this context it’s unclear why the Bank of England would consider raising rates anytime soon, even after today’s surprise figures.”