Retail inflation slows to 9-month low at 4.17%

Retail inflation slows to 9-month low at 4.17%

In June, the retail inflation stood at a five-month high of 5 per cent.

London's property market has always been seen as a safe investment, fuelling a massive rise in prices partly driven by big-money foreign investors.

Overall, consumer price inflation rose at an annual rate of 2.5 percent in July after holding at 2.4 percent in the previous three months, the Office for National Statistics said, in line with economists' forecasts in a Reuters poll.

Average house prices in the United Kingdom increased by 3 per cent in the year to June, the slowest rate since August 2013, according to data from the Office of National Statistics.

However, the figures for June show that the price of new build properties shot up 9.6 per cent on an annual basis to £294,070, 3.8 per cent higher than in the previous month. High YoY fuel price increases have led to continuous increase in inflation of the fuel and light, and the transport and communication groups.

The food inflation came at 1.37 per cent, driven by cooling of pulses, vegetable and sugar rates.

John Hawksworth, chief economist at PwC, said real household income growth will remain "subdued" over the next year.

Tej Parikh, senior economist at the Institute of Directors, said the rise in inflation showed the cost of living squeeze was not yet a thing of the past.

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When the Bank of England raised interest rates this month, it said inflation would rise to 2.6 percent in July before weakening.

"This is likely to weigh down consumer spending, posing fresh problems for embattled high street businesses". The CPI has risen 0.9% since the start of 2018 and 1.4% over the past 12 months, still within the government's target range for annual inflation of between 1% and 3%.

The average United Kingdom house price was £228,000 in June - £1,000 higher than in May and £6,000 higher than in June 2017.

The average price of flats and maisonettes increased by 0.5 per cent in the year to June 2018, to £204,000, the lowest annual growth of all property types.

"This measure of core inflation fell in 10 of the 12 regions of the United Kingdom".

The prices of clothes and footwear fell by as much as 3.7 percent month on month, coinciding with the summer sales period on the high street.

Analysts believe that prices have reached the peak of what buyers can afford as they are constrained by slow wage growth, rising mortgage rates and tougher rules on borrowing.

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