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.
Activists decry decision by Cambodia’s Ministry of Labour, one warning could lead to civil unrest
The move was cheered by the Zambia Congress of Trade Unions and Federation of Free Trade Unions
With overnight temperatures already nudging below freezing in Ukraine, European Commission President Jose Manuel Barroso hailed an accord clinched in Brussels
Xinhua said China has sent 20 teams to Thailand, the Philippines, Malaysia, Cambodia and other neighbouring countries, arresting 75 suspects.
Supporters say law will return country to energy self-sufficiency; critics say it is too lenient on companies.
The toll is expected to be introduced in 2016. Motorists have to pay it by registering their license plates via the internet. Foreigners can also pay the levy at gas stations
Moscow's Arbitration Court ruled in favour of prosecutors who said Bashneft was unlawfully sold to local authorities in the early 2000s before being sold in 2009 to oil-to-telecoms conglomerate Sistema
Waste oil from Chinese dinner tables to power airplanes by converting into aviation biofuel
The World Bank announced Singapore had been ranked the best country to do business in for a ninth consecutive year
LPG "certainly provides lower carbon dioxide per unit of energy than diesel and petrol when used in vehicles" expert claims
52 countries and regions including Germany, UK and South Africa agree to exchange financial information
OPEC members have previously said they wanted oil at around $100 a barrel
World stocks rose on Wednesday, lifted by strong corporate earnings and investor optimism that the U.S. Federal Reserve won't raise interest rates for some time, even as it is expected to officially wind down its bond-buying stimulus programme
London-based solar plant developer aims to bring solar power generated in Tunisia to Europe as electricity in 2018.
All 48 of the country's nuclear reactors were gradually taken offline following Fukushima, the world's worst nuclear disaster since Chernobyl in 1986.
British PM said the bill made it harder to make the case to keep Britain in the European Union before a membership referendum he has promised in 2017 if he is re-elected next year.