LONDON: Britain’s annual inflation rate slowed sharply last month as clothing retailers slashed prices in the pandemic-hit sector, official data showed yesterday, but economists warned it will likely rise again. The Consumer Prices Index stood at 2.0 percent in July, the Office for National Statistics said in a statement. The rate had soared in June to a near three-year peak of 2.5 percent as prices had accelerated on easing coronavirus restrictions.
“Inflation fell back in July across a broad range of goods and services, including clothing, which decreased with summer sales returning after the pandemic hit the sector last year,” said ONS statistician Jonathan Athow. Last month’s slowdown was partly due to the clothing sector, where price growth stood at 1.7 percent after a 3.0-percent bounce in June.
Inflation has nevertheless been propelled higher since March when the UK government began a phased lifting of coronavirus restrictions. The rate topped 2.0 percent in May to breach the Bank of England’s official target level for the first time since 2019. Despite the July slowdown, most economists predict prices will accelerate further as the global economic recovery gathers pace. The BoE had warned earlier this month that inflation would temporarily spike to 4.0 percent in the fourth quarter.
“Fall in year-on-year inflation last month masks the strength of inflationary pressures currently within the UK economy,” said KPMG chief economist Yael Selfin. “We expect inflation to accelerate further during the rest of this year, rising significantly above the Bank of England’s 2.0-percent target, as supply chains remain under strain faced with a strong rebound in demand.” – AFP