The UK’s recent growth spurt is not coming at the expense of higher inflation so far, as the Bank of England’s benchmark of the cost of living eased to 2.7 per cent in August, official figures showed today.
The fall in the Consumer Price Index to the lowest level since April was largely driven by lower price rises at the petrol pump than a year ago, and smaller increases in clothing costs. Economists said retailers may have struggled to shift autumn ranges amid much better weather.
BNP Paribas economist David Tinsley called the numbers “benign”, adding that the Bank’s inflation “knock-out” under its forward guidance regime was under little threat. Core inflation –stripping out volatile energy and food prices – is now at 2 per cent, the lowest since 2009.
“In time the UK recovery, if the better growth continues, may be expected to see some firming in inflationary pressure. But that is some way off,” Tinsley said.