Commenting on today’s ONS inflation figures, which show inflation, as measured by the Consumer Price Index (CPI) was unchanged in July at 2.6%, despite rises in electricity and air transport costs as well as in some food products
Commenting on today’s ONS inflation figures, which show inflation, as measured by the Consumer Price Index (CPI) was unchanged in July at 2.6%, despite rises in electricity and air transport costs as well as in some food products, Yael Selfin, Chief Economist at KPMG UK, said:
“The slide in the value of the pound over the past year has put significant pressure on companies’ margins. We have seen some of these costs passed on to consumers but there’s likely to be more in the pipeline. The recent rise in the price of oil, the further weakness of the pound against the euro, along with a resilient economy – albeit growing at a slower pace – are all likely to encourage further rises to consumer prices.
“Our current projections are for inflation to peak early next year, and average around 2.6% over the next two years. This assumes a moderate slowdown in economic growth and the Bank of England taking first steps in raising interest rates next year. Wages are unlikely to keep pace with the current bout in inflation, making households poorer in real terms and leaving a cloud over overall prospects for consumer spending and economic growth this year.”
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