By Marcus Leach
There was an unexpected rise in the UK inflation rate today (Tuesday) as the Office for National Statistics's data revealed an increase to 2.6%.
The annual inflation rate as measured by the Consumer Prices Index had stood at 2.4% in June, but has risen due to rises in air fares and housing costs.
The Retail Prices Index, which includes housing costs, rose to 3.2% from 2.8% in June.
“The day after Brent Crude hit the highest level for 3 months we have received further warning on prices here in the UK," Jeremy Cook, chief economist at foreign exchange company, World First, said.
“While the increase in fuel prices have had some effect, the lack of a large drop in clothes prices on the High St is telling. Retailers had cut prices in May and June to try an tempt people through the doors as the rain teemed down, but found no more room to cut in July.
“This obviously damages the monetary policy outlook in the UK as the Bank of England and Chancellor were hoping, and indeed forecasting, an inflation figure below target in the medium term, although the Governor had seemed to rule out interest rate cuts or substantial QE at the latest inflation report.”
Analysts had expected the rate to drop, but a 21.7% rise in air fare prices pushed the rate up.
"Inflation has halved since its peak in September, but any increase is disappointing," said a Treasury spokesperson.
"The government knows how tough things are for families at the moment and that is why we have reduced income tax, and frozen both council tax and fuel duty."
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