Inflation Up for July 2018

Published / Last Updated on 15/08/2018

Inflation July 2018Inflation Up to 2.5 Per Cent: The Office for National Statistics has released inflation figures for July 2018 with headline CPI inflation going up to 2.5% pa from June's 2.4% pa yet the old measure of inflation, RPI, fell back to 3.2% pa from its June level of 3.4% pa.

Inflation + Housing Costs CPIH

The Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate  held at 2.3% pa.  This is known as CPIH and a benchmark we believe that now includes owner occupier housing costs as mortgage interest rates are low.  This is not CPI but CPIH.

Consumer Prices Inflation CPI

The Consumer Prices Index (CPI) went up to 2.5% pa.  This is a key Bank of England (BoE) number and relieves pressure on the Bank of England to increase interest rates.

Retails Prices Index (RPI) – the old measure of inflation

RPI fell back from 3.4% pa to 3.2% pa.  Although this is no longer an official 'National Statistic', it certainly gives an indication that the pound has weakened and there is slight movement in prices and still not releaving pressure on the Bank of England to increase interest rates yet again after the last 0.25% increase to 0.75% pa on the 2nd August.   The £ is weak due to a 'no deal' Brexit looming so imported food, goods and games prices may increase further.  Expect another rate rise by the end of the year.


We expect that a marginal CPI rise and reduced RPI will no doubt maintain a weaker pound although strengthen it a little versus the Euro but further weaken it against the dollar and will push stock markets down and indeed it has started just after these figures were released.  That said, the interest rate  rise has not strengthened the pound as expected.  We are limping towards Brexit but unemployment is at its lowest level since 1975, so inflation will, we believe, keep moving steadily upwards with Bank of England intervention.