Inflation increases to 1.9%, but remains below target
[ 15-07-2014 ]
The release of official data indicates a rise in inflation, as measured by the Consumer Price Index (CPI), to 1.9%, an increase from 1.5% in May. This can partly be attributed to a rise in the price of clothing and footwear, indicating a change from normal patterns where summer sales between May and June push down prices. Moreover, the fall experienced in food & non-alcoholic drink prices in May have now risen back to levels similar to the year previous, adding pressure to consumers. Additionally, the rise in air fares which is typically experienced between May and June acts as a driver for increasing inflation due to changes on European Routes.
Figures from the Retail Price Index (RPI) indicate a rise to 2.6%. While costs experienced by owner occupiers, as measured by the CPIH, rose from 1.4% in May to 1.8% in June.
Commenting on figures from June, Liz Cameron, Chief Executive of Scottish Chambers of Commerce, said:
“Whilst a rise in inflation has been experienced, it is important to note that the rate remains below the Bank of England’s target of 2.0%. Therefore, there is no immediate pressure to increase interest rates as these figures indicate the seventh consecutive month in which inflation is below the target of 2.0%.
“Further statistics continue to show the cross-border asymmetry in housing prices, with house price annual inflation at 11.0% in England compared to Scotland’s much lower rate of 3.6%. Therefore, it is imperative for the Scottish economy that the Bank of England address the rise in UK house prices by exploring the use of alternative measures, such as; an increase in the number of houses being built as well as a rise in rental capacity, and do not only consider increasing interest rates. This will assist Scotland from suffering from the localised housing price bubble in London.”
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