WIREDGOV

Julian Jessop, Economics Fellow at free market think tank the Institute of Economic Affairs, commented on today’s CPI inflation figures

“The surprise fall in consumer price inflation to 2% in July is welcome, but unlikely to last.

“The figures were flattered by a number of special factors, including falls in some erratic prices (such as computer games), distortions due to the timing of summer sales and other base effects (notably affecting clothing and footwear), and some figures which are little more than guesswork due to the pandemic (including the true cost of package holidays).

“Other inflation gauges are less encouraging. There was only a slight fall in RPI inflation, from 3.9% to 3.8%. This measure is still used to set many bills, including rail fares. Producer price inflation is continuing to accelerate, meaning there is plenty more upward pressure in the pipeline.

“Consumer price inflation is still set to rise to at least 4.5% by the end of the year – well above the Bank of England’s target of 2%. One month’s slightly dodgy data therefore make little difference to the case for ending the policy of money printing – sooner rather than later.”

Notes to editors 

Contact: Emily Carver, Head of Media, 07715 942 731

IEA spokespeople are avaialable for interview and further comment.

Consumer price inflation, UK: July 2021