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Consumer Price Index


Inflation remains flat, Retail Price Index rises in July

The latest figures from the Office of National Statistics (ONS) have revealed that inflation remained flat in July, at 2.6%, with experts hoping that that it has now “peaked.”

Figures also show that the Consumer Price Index remains above the Bank of England’s 2% target, considerably better than analyst’s predictions of a 2.7% rise.

However, the Retail Prove Index rose by 3.4%, resulting in an ongoing squeeze on an average household spend.

ONS figures also found that food and clothing prices were the worst effected.

Commenting on the figures, Ben Brettel, senior economist, Hargreaves Lansdown said: “It now looks quite possible inflation has peaked, and will fall back further in coming months.

“The year-on-year increase in producers’ raw material costs fell to 6.5 per cent in July – undershooting forecasts for a seven per cent rise.

“This was down from 10 per cent in June, the biggest month-to-month slowdown in almost five years.

“Input prices are a leading indicator for consumer price inflation as higher input prices are often ultimately passed on to the consumer, and therefore a lower number here could bode well for softer consumer prices down the line.

“All this is good news for the consumer, as it helps alleviate the continuing squeeze on household finances, though pay is still shrinking in real terms for now.”


Business rates set to save retail £250 million

Mounting pressure on the Government to change the way business rates are calculated has forced a move that could see retailers save £250 million.

During the 2016 budget the Government announced plans to switch to the Consumer Price Index (CPI), reasoning that the Retail Price Index (RPI) can outpace growth and uses rises faster. This failed after the General Election was announced.

The Government has now announced its commitment to base rates calculations on the CPI inflation rate from 2020.

The Treasury released a statement which read: “We are committed to switching business rates indexation from RPI to CPI from 2020 and will introduce legislation in due course.”

The Treasury claims that the changes would save businesses £1 billion in the first three years. Retail is set to save £250 million.

The move follows demands from pressure groups for a fairer tax system to help local shops, town centres and businesses.

Mark Rigby, boss of business rates adviser CVS, said: “The Chancellor has moved quickly and decisively to quell speculation.”