PwC senior economist Mike Jakeman comments on today's UK inflation data:
"At 2.1% year on year in July, consumer price inflation remains close to the Bank of England's target of 2%, as it has done throughout 2019 so far. The rate picked up mildly from June as clothing and footwear prices began to rise again
after several months in which they had been pulling down the index.
Inflation is likely to be subject to countervailing forces in the coming months. If the economy continues to slow, demand will, in theory, weaken too, suggesting that inflation may fall below the Bank's target rate. However, the depreciation of the pound over the past month in particular will make imports more expensive and drive up price growth.
The latest data will not change the position of the Bank of England, which is committed to keeping interest rates on hold at least until more clarity is provided on Brexit. Were the UK to leave with the EU without a deal, the Bank would then face a difficult decision between cutting rates to support growth (which would be likely to push inflation up further) or raising rates to keep inflation close to its target (but stymieing growth). It has so far remain tight-lipped on its preferred approach."
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 158 countries with over 250,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details.
© 2019 PwC. All rights reserved
Manager, Corporate Affairs, PwC United Kingdom
Tel: +44 (0)7483 329628