UK inflation jumps as eurozone growth slumpsFollow @PwC_Scotland
UK inflation jumped to 2.6% in July, according to data from the Office the National Statistics (ONS).
This morning’s consumer price index (CPI) data from the ONS shows year-on-year inflation up 2.6% from 2.4% in June.
The surprise increase was mostly due to a 21.7% jump in air travel and an increase in housing costs, particularly rents.
July’s retail price index (RPI) inflation jumped to 3.2%, also ahead of expectations.
At the same time, data for the three months to June showed eurozone growth falling by -0.2%, worse than the zero growth in the preceding quarter.
Commenting on today’s figures, Dr Esmond Birnie, PwC’s chief economist in Scotland and Northern Ireland said:
“These are disappointing figures, with observers having expected inflation to steadily decline towards the Bank of England's 2% target.
“However, inflation is still 50% below last September’s peak and the general trend remains downwards, with the increase in air fares, particularly to European destinations, a major contributor to today’s figure.
“Travellers should now expect increases in the cost of domestic travel as these are based on the July RPI.
“English fares would rise by 3% above today’s RPI, while in Scotland they are set to go up by RPI plus 1%.
“Today’s eurozone numbers aren’t good news either; Germany grew by a better than expected 0.3% and the Netherlands also grew by 0.2%.
“But with France delivering three successive quarters of zero growth, the prognosis for the rest of the year is not good.
“So long as the eurozone crisis remains unresolved, the UK and its regions cannot expect to see any significant recovery.”
Email: Esmond Birnie
Tel: +44 (0)28 9041 5808