Inflation Rises Slightly to 2.2% in July 2024
Key Points at a Glance:
- The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 3.1% in the 12 months to July 2024, up from 2.8% in June 2024.
- The Consumer Prices Index (CPI) rose by 2.2% in the 12 months to July 2024, up from 2.0% in June 2024.
Inflation Trends:
In July 2024, the CPIH and CPI inflation rates showed a slight uptick, marking a divergence from the previous month’s stability. The rise in CPIH to 3.1% and CPI to 2.2% underscores ongoing inflationary pressures, particularly in housing costs, despite a backdrop of generally easing inflation since late 2022.
Key Drivers of Inflation:
Housing and Household Services:
The housing sector was the most significant contributor to the rise in inflation, driven primarily by gas and electricity prices, which, despite declining year-on-year, did so at a slower rate compared to the previous year. The owner occupiers’ housing costs (OOH) rose by 7.0% in the 12 months to July 2024, up from 6.8% in June.
Restaurants and Hotels:
This sector saw a decline in inflationary pressure, with prices increasing by 4.9% in the year to July 2024, down from 6.3% in June. The drop was largely due to a decrease in hotel prices, which fell by 6.4% month-on-month, contrasting with a rise of 8.2% in the same period last year.
Transport:
Transport costs rose slightly by 0.1% year-on-year, down from 0.7% in June. The price of motor fuels and maintenance saw downward pressures, while second-hand car prices also continued to decline.
Food and Non-Alcoholic Beverages:
The inflation rate for food and non-alcoholic beverages remained steady at 1.5% in July 2024. This marks the first time since March 2023 that the annual rate has not decreased, indicating that the earlier sharp rises in food prices have stabilized.
Implications for Interest Rates:
The Bank of England is closely monitoring these developments. The slight increase in the inflation rate, especially in housing-related costs, suggests that the Bank might maintain a cautious stance on interest rates. Despite the overall downward trend in inflation since late 2022, core inflation remains elevated, indicating persistent underlying pressures.
Future Outlook:
While the July figures show a moderate increase in inflation, the overall trend remains downward from the highs of 2022. However, several factors could influence future inflationary trends, including wage growth and global economic conditions.
Moving Forward: How We Can Help
At Kerr & Watson, we understand how these economic shifts can impact your financial situation. Whether you’re reconsidering your mortgage options or reviewing your insurance plans, our team is here to provide tailored advice to suit your needs.
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We are committed to guiding you through these uncertain economic times with expert advice and personalised solutions. Contact us today to discuss how the latest inflation changes might affect your financial planning.
Data Source: Office for National Statistics (ONS) Read more: Consumer price inflation, UK: July 2024
