Not unexpected it would seem, but also probably a reason why the election was rushed through. Inflation down to 2% is a better slogan than down to 2.3%, or 2.75%
The major reason for this is that inflation is measured based on the growth in prices over the past year, so a large part of the figure is based on what prices were 12 months ago.
In April, the energy price cap – the maximum most households pay for each unit of gas or electricity used – was cut by the regulator Ofgem. In April 2023, the amount people were paying for their energy was at the highest level on record, but the cap fell in July 2023.
So while energy prices deflated dramatically in the 12 months leading up to April to June 2024, dragging the headline inflation figure down, the deflation is less dramatic in July.
And also
It predicted at the beginning of August that inflation will rise to 2.75 per cent by the end of 2024 and stay high for the foreseeable future before dropping to below 2 per cent again in the summer of 2026
Very interesting analysis. Thanks 👍.
That all suggests that everything apart from energy is still inflating really quickly.
really quickly
Unless there are some factors that I am not aware of affecting the UK, I don’t think that inflation will reach particularly high levels – like, of the COVID-19 sort – in the near future. And inflation normally does bounce around a bit.
Yeah it’s higher than energy, correct. But not stupidly high.
Forecasters expect core CPI, which excludes energy and food prices, to stay at around 3.5 per cent and services CPI, which measures items such as rail tickets and hospitality costs, to drop a little, with Deutsche Bank and Pantheon Macroeconomics saying it could go from 5.7 to 5.5 per cent.
“Positive base effects, mainly from energy prices, will likely push headline inflation higher through the second half of 2024. But there is good news. Services inflation, we expect, should continue its descent – albeit gradually,” said Sanjay Raja of Deutsche Bank Research.
Excluding energy AND food takes away the area I’ve personally perceived as rising. Food.
