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.
Azerbaijani president said in a statement that Southern Gas Corridor project will supply neighboring and European countries for a 100 years
Oil prices rose above $60 due to Iran's call for oil production cut
Economic growth in the Euro-Zone is not at desired levels.
Director and Global Head of Islamic Finance at Standard & Poor's says that growing market for sukuk and new players mark 'significant interest' in Islamic finance.
The Ministry of Finance said that Denmark has written to China to "announce its intention to apply to be a founding member" of the AIIB.
Experts state that the crisis poses risks to the region, which is significant for oil production and exports in the world.
Federal Reserve removes word 'patient;' interest rate increase expected within months. Yellen says timing of rate rise 'not decided,' but will come anytime after April; holds current rates at 0 to 0.25 pct.
Many emerging-market currencies have fallen against the dollar in recent weeks
Anticipated Federal Reserve interest rate hikes making dollar strong against most emerging market currencies, Deputy Prime Minister Ali Babacan says.
European Statistical Agency says slight decline fuelled by drop in production of durable consumer goods.
EU will use all its foreign policy instruments to establish strategic energy partnerships with producing and transit countries.
Dollar strength and waning investor confidence are driving the lira lower
Greece has already received two bailouts totalling 240 billion euros but fellow euro zone member Ireland said last week that it would have to negotiate a third programme.
The Ukraine crisis has tested the loyalties of Bulgaria, a Balkan country with historical ties to Moscow and heavily dependent on Russian energy supplies.
Syria expels three United Nations aid workers hindering aid development in the country
Russia has overcome a "psychological barrier" and is ready to deepen its economic ties with China, Deputy Prime MinisterArkady Dvorkovich said