United Kingdom inflation rises for first time in 2018, London house prices fall

16 August, 2018, 11:11 | Author: Brooke Harris
  • A vendor arranges vegetable at his stall in a market in Mumbai

The ONS reported that the rate of consumer price inflation, the most-watched measure, increased from 2.4% in June to 2.5% in July, reversing a trend of gradually declining inflation over the course of 2018.

In England, house prices increased by 2.7 per cent over the year to June 2018, with the average price now standing at £245,000.

Data from the Office for National Statistics shows that house prices in London dropped 0.7% in the year to June, the lowest annual growth rate since September 2009 when they fell 3.2%.

Though fruits had a positive rate of inflation (6.98 per cent), it was below expectation. Wales saw prices increase by 4.3 per cent over the last 12 months to stand at £157,000, while prices in Scotland grew by 4.8 per cent over the year to now stand at £150,000.

Earlier this week official figures showed wages growth falling steadily over recent months, from 2.8% in February to 2.4% in June.

John Hawksworth, chief economist at PwC, said real household income growth will remain "subdued" over the next year.

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Tej Parikh, an economist at the Institute of Directors, said: "These figures show that the cost of living squeeze is not yet a thing of the past".

"This is likely to weigh down consumer spending, posing fresh problems for embattled high street businesses", Parikh said. "Food inflation is only 1.37%", he said in a tweet.

"Inflation in most other components of core inflation eased, as the boost from sterling's depreciation continued to wane", he said. The CPI has risen 0.9% since the start of 2018 and 1.4% over the past 12 months, still within the government's target range for annual inflation of between 1% and 3%. The measure excludes 5% of the highest and lowest price changes.

"The CPI inflation in Q2 FY2019 looks set to lag the MPC's estimate of 4.6 per cent, reducing the likelihood of a rate hike in the October 2018 policy review", she added. The fall can not be explained by the summer sales, as the fraction of goods and services at sales prices was the lowest since 2012.

The CPI hit a five-year high of 3.1 percent in November, when the inflationary effect of the pound's tumble after the Brexit vote reached its peak.

The rise in inflation follows a decision by the Bank of England to raise interest rates to the highest level since 2009, putting more pressure on the cost of borrowing.

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