UK consumer price index growth slowed more than expected in July

According to the report from Office for National Statistics, the Consumer Prices Index (CPI) rose by 2.0% in the 12 months to July 2021, down from 2.5% to June. Economists had expected a 2.3% increase. On a monthly basis, CPI was unchanged in July 2021, compared with a rise of 0.4% in July 2020.

The Consumer Prices Index including owner occupiers’ housing costs (CPIH) rose by 2.1% in the 12 months to July 2021, down from 2.4% in the 12 months to June.

The largest upward contribution to the CPIH 12-month inflation rate came from transport (0.85 percentage points).

CPIH was unchanged on the month in July 2021, compared with a rise of 0.4% in July 2020.

Clothing and footwear, and a variety of recreational goods and services made the largest downward contributions to the change in the CPIH 12-month inflation rate between June and July 2021.

Price rises for second-hand cars, compared with falls a year ago, resulted in the largest, partially offsetting, upward contribution to change.

Around 0.2 percentage points of the easing in the CPIH rate between June and July 2021 came from base effects, specifically from items that became available again in July 2020 at the end of the first coronavirus (COVID-19) lockdown.