Today’s figures for the Consumer Price Index show that the price of motor fuel continued to fall and provided the largest downward contribution to change in the rate between June 2017 and July 2017.
Fuel prices fell by 1.3% between June and July 2017, the fifth successive month of price decreases. This contrasts with the same period last year, when fuel prices rose by 0.7%.
But this was offset by smaller upward contributions from a range of goods and services including clothing, household goods, gas and electricity, and food and non-alcoholic beverages.
Last month UK inflation unexpectedly dropped to 2.6% from 2.9% despite predictions that it would continue to rise. Forecasters thought inflation would reach 2.7% this month but this has not materialised.
The rate of inflation still stands 0.6% above the Bank of England’s target of 2% and inflation is still outstripping wage growth which is around currently at around 1.8%, meaning pay packets are squeezed.
The ONS also confirmed today that Retail Price Index (RPI) stands at 3.6%, this measure is used by government to set regulated train fares – this means regulated rail fares are set to rise by 3.6% in January next year.
Train users already saw fares jump 1.9% at the beginning of this year.
Commenting on today’s figures a spokesman for the Treasury, said: “Although inflation is likely to start falling next year, we understand some families are concerned today about the cost of living.
“That is why we have given the lowest paid a pay rise through the National Living Wage and are cutting taxes for 31 million people.”
However TUC general secretary Frances O’Grady said called on the government to “wake up” and get wages rising in both the public and private sector.
She said: “Britain’s cost of living crisis is not easing up. The squeeze on cash-strapped families continues to grip.
“Rising prices are hammering pay packets. And today’s announcement on rail fare hikes will only add to the pressure households are under.”
