Inflation rate drops to 11.14% in July-NBS

The RBI has raised its inflation outlook to 4.8% in the second half of 2018-19 from its earlier projection of 4.7

The RBI has raised its inflation outlook to 4.8% in the second half of 2018-19 from its earlier projection of 4.7

There was a sharp drop in the rate of inflation last month, and it's now at its lowest level since the start of previous year.

Prices for computers games - which are often volatile - and transport fares pushed up inflation in July.

The Consumer Price Index rose to 2.5 per cent in July, up from 2.4 per cent in June, the first rise recorded since November 2017, said the Office for National Statistics.

Similarly, the country's urban inflation eased to 11.66 per cent in July 2018 from 11.68 per cent recorded in June while the rural inflation rate remained flat at 10.83 per cent in July 2018 from 10.83 per cent in June 2018.

Analysts believe that prices have reached the peak of what buyers can afford as they are constrained by slow wage growth, rising mortgage rates and tougher rules on borrowing.

Meanwhile the Retail Prices Index (RPI) measure of inflation fell to 3.2%.

Whilst there continues to be upward pressure from increasing oil costs, on both petrol and oil for heating, travel costs have been causing less pressure on inflation than in previous months.

Retail inflation fell to nine-month low of 4.17 per cent in July on account of slowdown in prices of vegetables and fruits, said government data released today.

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House prices in Britain are rising at their slowest pace in nearly five years as subdued demand and rising mortgage costs weigh on the property market.

According to Prasanna, with FY19 headline CPI inflation to average 4.7-4.8 per cent and core inflation averaging 5.8 per cent, chances of impending rate hikes, though, have come down, but the hike cycle is not over yet.

"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.

Prices for clothes were down by as much as 3.7pc month on month.

"Inflation should resume a modest downward trend towards the end of the year, helped by favourable base effects as the impact on import prices of sterling's sharp drop after the Brexit referendum wanes further", he said.

Tuesday's data also showed that real wages in the United Kingdom continue to grow, although not by much, something that will be made worse by Wednesday's higher inflation reading.

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