Tuesday, August 17, 2010
Inflation better - but still a letter
Posted by David Smith at 10:00 AM
Category: Thoughts and responses

Consumer price inflation dropped from 3.2% to 3.1%, retail price inflation from 5% to 4.8%, and retail price inflation excluding mortgage interest payments (RPIX) also from 5% to 4.8%. Food prices rose but transport (second-hand car prices and petrol) and clothing (down by a huge 4.9% in July), fell. Note, as David B Smith of the shadow monetary policy committee has pointed out, how the consumer prices index has been promoted in the official release here, almost but not quite to the exclusion of the RPI.

The drop in inflation did not spare Mervyn King from having to write his eighth letter of explanation. He will have been reassured by a further drop in CPI inflation at constant tax rates, which is now just 1.3%, down from 1.5%.