Inflation has continued its recent downward trajectory, falling to 6.8 per cent in the year to July, its lowest point in the last 12 months
The Office for National Statistics announced today (August 16) that the consumer price index has fallen by 1.1 percentage points to reach 6.8 per cent.
This compared to the 7.9 per cent that was recorded for the year to June.
The annual RPI inflation rate was 9.0 per cent in July 2023, compared to 10.7 per cent in June.
While some have described the announcement as “good news” others have argued that it constitutes a “false dawn” for savers.
Sharing a positive outlook on today's announcement, Atrato Group co-founder and principal, Steve Windsor, said: “Today gives further good news on UK inflation, with headline CPI continuing to trend downwards.”
He added that the data will “relieve” some of the pressure on the Bank of England for further rate hikes and that it indicates “we may have topped out inflation-wise in this cycle".
However, while CPI experienced a “sharp” fall over July, core CPI (which strips out energy, food, alcohol and tobacco) remained unchanged, staying at the 6.9 per cent that was recorded for June.
Hargreaves Lansdown head of personal finance, Sarah Coles, described the news as “widely predicted” but acknowledged that it would come as a disappointment for the Bank of England, which looks to core CPI when setting interest rates.
IG Group chief market analyst, Chris Beauchamp, commented that the core figure's persistence is “yet another sign that higher prices are here to stay”.
He added: “The BoE can allow itself only a moderate period of rejoicing.”
Additionally, Scottish Friendly savings specialist, Kevin Brown, warned that today’s data is a “false dawn” for savers.
Brown pointed out that price rises have eased in some areas, such as gas and electricity bills, which has driven down the headline rate of inflation.
Additionally, the ONS detailed that food prices rose by less in July 2023 than they had in July 2022, thereby leading to an easing in the annual inflation rates.
“But the current downward trajectory is unlikely to continue with the Monetary Policy Committee predicting more incremental reductions over the coming months,” Brown stated.
Hotels and passenger transport by air were found to be the classes that provided the largest offsetting upward contributions to the change in rate.
tom.dunstan@ft.com
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