Food prices help push UK inflation to seven-year high
Rising food prices helped inflation in the UK edge up to its highest level in seven years last month, official figures showed today.
The Consumer Prices Index (CPI) moved up to 2% from 1.9% the previous month, hitting the Government’s target as analysts had predicted.
Food had a large upward effect on inflation, with the main contributions coming from fruit – particularly grapes and strawberries – as well as meat.
Clothing and footwear were other main drivers, with prices falling by less than last year when special offers were more widespread.
CPI – the Government’s preferred measure – had remained at 1.9% for the previous three months.
Today’s figures showed it crept up to its highest level since May 1998, when it stood at 2.1%.
The Bank of England had predicted in its May quarterly inflation report that CPI inflation would probably rise above its 2% target in the near term, before easing back again.
Today’s data also showed the headline rate of Retail Price Index (RPI) inflation, which includes mortgage interest payments, was unchanged at 2.9% in June, while the underlying RPI rate rose to 2.2% from 2.1%.
Smaller contributors to the rise in CPI were furniture and household goods, as well as financial services due to a large fall in the cost of changing foreign currency a year ago.
Products such as computers and DVDs had a downward effect as they fell this year. Cheaper package holidays – especially to Mediterranean destinations – also contributed.
