World Bulletin / News Desk
British inflation unexpectedly rose in July, damaging hopes that easing price pressures would allow Britons to help the recession-hit economy with higher spending, but leaving expectations for more central bank stimulus intact for now.
Consumer price inflation inched up to 2.6 percent from 2.4 percent in June as prices for airfares soared and clothing retailers reined in seasonal discounts, the Office for National Statistics said on Tuesday, confounding economists' forecasts for a fall and posting the first rise since March.
Last week, the Bank of England slashed its inflation forecast, seeing inflation nearly back at its 2-percent target by the end of this year.
Analysts said the July figures were bucking a broader trend.
"We really need to take the June and July figures together and this implies that the downward trend in prices remains in place," James Knightley, an economist at ING, said.
"The rise in oil prices and food commodities presents some risks for headline inflation in coming months, but with the weak economy implying only limited corporate pricing power we still expectinflation to fall below 2 percent by the end of the year," he added.
UK bond futures briefly fell on the news and the pound rose to a 2-week high against the dollar.
The ONS said that airfares jumped 21.7 percent on the month, the largest rise from June to July since 2004.
The monthly fall in clothing and footwear prices was the smallest June to July drop since records started in 1996 as retailers had started seasonal discounts in June due to unusually wet weather.
A fall in inflation is seen as a crucial ingredient for a recovery from the recession the economy tipped into around the turn of the year.
"Inflation has halved since its peak in September but any increase is disappointing," a finance ministry spokesman said. "The government knows how tough things are for families at the moment."
Many Britons have experienced the worst squeeze in living standards in over 30 years and scaled back spending as higher taxes and rising prices have eaten up meagre wage increases.
Inflation has fallen sharply from the three-year peak of 5.2 percent hit in September 2011, and June's fall had been much sharper than expected, driven in part by the early summer sales.
The ONS said the fall in clothes prices between May and July was overall similar to previous years.
The central bank predicts a further fall to around 1.7 percent in two years time, indicating that it had room to add more stimulus once the current programme to buy 50 billion pounds of government bonds ends in November.
Core consumer price inflation, which strips out volatile components such as food and fuel, also rose to 2.3 percent from 2.1 percent, casting further doubt on whether inflation will fall much further.
In a separate release the ONS said house prices in Britain rose by 2.3 percent on the year in June, the same as in May, driven by a 6.5 percent annual house price increase in London.
However, a survey by the Royal Institution of Chartered Surveyors showed on Tuesday that Britishhouse prices experienced their most widespread falls for a year in the three months to July, and surveyors do not expect the outlook to improve over the next 12 months.
OPEC's second-largest producer, Iran is normally among the first members of the oil producers' group to call for supply cuts to support prices.
The 21-member Asia-Pacific Economic Cooperation (APEC) bloc said they would advance structural reforms to unleash new sources of growth.
Ukraine needs to pay its previous debt to Russia by the end of the year and pay in advance for getting new volumes of natural gas
The loss of Khafji's 280,000 barrels per day of Arabian Heavy crude will be felt more in Kuwait, which has far less spare output than its neighbour
Under Lufthansa's proposals, pilots would still be able to retire early, but the age would gradually increase to 60 from 55.
Labor tension on the rise as high inflation reduces spending power.
Third quarter growth was lowest in more than five years, threatening annual target
De Margerie was killed when a business jet collided with a snow plough during takeoff at Moscow's Vnukovo International Airport overnight, the company and airport officials said.
Stabilised political and security situation, the launch of government initiatives toward fiscal consolidation and strong support from external donors are some of the reasons given for improved economic outlook.
Norway will not supply gas to Europe in case of supplies being cut by Russia, says Norwegian Energy Minister Lien
A fall in global oil prices, down more than 20 percent from this year's June high, means that ending costly diesel subsidies will save the government money without hurting consumers.
EU officials said the gas talks would continue in Brussels next week, with Poroshenko telling reporters that the financing still needed to be resolved.
The food-producing regions of Guinea, Sierra Leone and Liberia in West Africa have been severely affected by the worst outbreak on record of the viral haemorrhagic fever
Fall in crude oil prices will effect Iran's oil industry more than Western sanctions
Widodo currently plans to raise the price of both gasoline and diesel by 3,000 rupiah ($0.25) per litre by November, the advisor said.
Mario Pezzini and Romano Prodi jointly emphasized that Africa should be of priority for European Union’s future development policies.