Tuesday, July 16, 2013
Inflation - bad and good news
Posted by David Smith at 12:00 PM
Category: Thoughts and responses

It was bad news that consumer price inflation rose from 2.7% in May to 2.9% in June, though it was good news that it remained below the 3.1% level that would have triggered a letter of explanation from Mark Carney, the new Bank of England governor.

All measures of inflation rose in June, mainly reflecting so-called base effects. So, while prices overall fell by 0.2% during the month, they fell by more (0.4%) in June 2012. It will be touch and go whether inflation falls much in July - the comparator in July last year was a rise of 0.1% - but there are good reasons to expect inflation to come down in the second half of the year.

You have a big choice of inflation measures these days. CPIH, including owner-occupiers' housing costs, showed inflation up from 2.5% to 2.7%. RPI inflation rose from 3.1% to 3.3%, while the new RPIJ measure increased from 2.5% to 2.7%. All these inflation measures are available here.

There was more inflation news today. Outout price inflation in the 12 months to June was 2%, up on the 1.4% recorded in May, while input prices rose by 4.2%. There is still some inflation in the pipeline. Meanwhile, the Office for National Statistics' house price measure showed a 2.9% rise in the latest 12 months, the same as consumer price inflation.