Inflation Drops More Than Expected In July

The two measures of UK inflation have dropped more than expected, in the year until the end of July.

According to official data, the Retail Prices Index (RPI) stood at 2.5% and the Consumer Prices Index (CPI) was 1.6%.

Economists had expected a CPI rate of around 1.8%, after official figures showed a June rate of 1.9%.

Inflation has now been below the Bank of England (BoE) 2% target for seven straight months - the first time this has occurred since 2005.

The RPI, which unlike the other measure includes housing costs, was recorded in June at 2.6%.

The Office for National Statistics (ONS), said the biggest contributor to the slowing annual inflation rate was discounting on the high street for clothing and footwear.

Food and non-alcoholic drinks also fell year-on-year, and the CPI was also eased by falling spirits and wine prices.

The data comes as commuters learned they would face a 3.5% increase in rail fares next year, which are used to calculate increases.

The further drop to the CPI eases pressure on the BoE to hike the 0.5% base rate, which has been at its historic low for the last five year.

Meanwhile, the ONS said UK house prices increased by 10.2% in the year to June, reaching a new high average price of £265,000.

House prices in the capital, however, shot up by 19.3% in the year to June.

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