Inflation ticks down from June peak to 2.8%

The consumer prices index measure of inflation grew by 2.8 per cent last month, down from a 14-month high in June, which economists said could be the start of a downward trend.

The largest contributions to the drop came from falling air fares, although this was partially offset by a rise in petrol prices.

“July’s fall in inflation... is likely to presage the start of a sustained drop,” Martin Beck, UK economist at Capital Economics, said.

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He added that the year-on-year figure was helped by a spike in inflation last July, and subdued price pressures made it likely the trend would continue.

“Looking forward, although there are growing signs of economic recovery, we think the degree of slack in the economy will help push down inflation close to the Monetary Policy Committee’s 2 per cent target by the end of the year,” he said.

CPI inflation monitors the change in price on a market basket of consumer goods and services purchased by households.