- Reserve Bank of Australia
The UK inflation rate turned positive in July as the Office for National Statistics said Tuesday that the consumer price index rose to 0.1%, beating a zero growth forecast. Moreover, core inflation, a less volatile measure, which stripped out energy, food, alcohol and tobacco, increased to 1.2% from 0.8%, reaching the highest rate in five months. Measured on a monthly basis, inflation declined 0.2% in July. A recent strength of the Sterling and sharp decline in oil prices has curbed inflation in Britain. The latest data also showed that the retail price index stayed unchanged at 1%, just in line with expectations.
While the figures published were stronger than anticipated, inflation is still well below the Bank of England's 2 % target. Economists say inflation is likely to remain low in the short term. BoE officials led by Governor Mark Carney expect consumer-price inflation to hover around zero for most of this year, before accelerating back to the target during 2016 and 2017. In its latest economic outlook, the BoE stressed that strong Pound and steep drops in oil prices would push down inflation until at least the middle of 2016 and said the impact of the rise in Sterling could persist even longer. Any further upward movement in inflation could trigger the central bank to start raising interest rates as other indicators, including GDP, wage growth and jobless rate, point out the signs of steady recovery in the economy.
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