UK inflation rose in July with the Consumer Prices Index (CPI) measure rising to 0.1%. In June, the percentage stayed at 0% and the Office for National Statistics (ONS) stated that the main reason that inflation rose is because of the lower prices of clothing.
However, the Retail Prices Index measure of inflation has stayed the same at 1% and this will be used to calculate rail fare increases. The fares will remain the same until next year.
For the last six months, CPI has been almost flat and turned negative in April. This is the first time since 1960. CPI inflation strips out increases in energy, food, alcohol and tobacco. In addition to this, the underlying measure of CPI inflation rose to 1.2% in July, which is a five-month high. The ongoing supermarket price war could be the reason that CPI was held back, with a 2.7% year-on-year fall in the price of food and non-alcoholic drinks.
Taking all this into consideration, there has been question over when the Bank of England might raise interest rates. The Bank has a target inflation rate of 2%.
In the past two months, the drop in the price of oil has fallen by nearly a quarter, which is why analysts have said that the inflation rate could fall back again.