Published: Thu, August 16, 2018
Money | By Armando Alvarado

Retail inflation cools to 4.17% in July; pulses, vegetable prices eases

Retail inflation cools to 4.17% in July; pulses, vegetable prices eases

According to Prasanna, with FY19 headline CPI inflation to average 4.7-4.8 per cent and core inflation averaging 5.8 per cent, chances of impending rate hikes, though, have come down, but the hike cycle is not over yet.

Inflation rose last month, largely due to higher transport costs, new official figures show.

Samuel Tombs, chief United Kingdom economist at Pantheon Macroeconomics, said a pick-up in the cost of recreational goods and services to 3.1%, from 2.4% in June, mostly related to computer games, was another reason for the rise in average prices. Prices of clothing and footwear fell 6.7% in July.

The consumer prices index (CPI) rose at an annual rate of 2.5% last month after holding at 2.4% in the previous three months, following a steep rise in annual energy price growth from 8.7% in June to 9.3%.

Inflation in the United Kingdom had been subdued for several years prior to the vote to leave the European Union in June 2016.

In Scotland, the average price increased by 4.8% over the year to reach £150,000.

Annual house price rates of change, 2006 to June 2018.

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The price of a typical United Kingdom house is now around £228,400, a £1,000 increase on the previous month.

Shaun Church, director at mortgage broker Private Finance said: 'A slight correction in house prices is no bad thing for the United Kingdom property market.

The average price in Northern Ireland now stands at £133,000, an increase of 4.4 per cent over the year.

"Given the recent weakness of the pound, inflation may remain sticky at around this rate for the next few months, keeping real wage growth to a minimum", he said. This is the first time that the Home Price Index has risen since August 2017.

'The big question is what happens to prices when the property market's own version of Quantitative Easing is taken away?'

Property transaction statistics for June show that on a seasonally adjusted basis, the number of transactions on residential properties with a value of £40,000 or greater was 96,340. The IMF had lowered its growth projection for India last month by 10bps to 7.3%, citing higher oil prices and speedier interest rate increases by the RBI because of higher-than-expected inflation.

'However, mortgage approvals are starting to turn up again, indicating that buyer numbers are likely to recover by the end of the year.

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