Analysts cautiously forecast slower price rises in August

Ben Southwood
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THE CONSUMER Price Index (CPI) will have increased more slowly in August, analysts expect, ahead of its release tomorrow morning.

Last month it was revealed that CPI grew 2.6 per cent in July, jumping up from 2.4 per cent in June and challenging the steady downward trend observed since its peak at 5.2 per cent in September last year.

But the general feeling among analysts is that July was a blip, and August will see reversion to trend.

"While the further rise in petrol prices will not have helped, we expect CPI inflation to have fallen [back] to 2.4 per cent," said Capital Economics' Samuel Tombs.

Daiwa Capital's Chris Scicluna also expected a downward shift - although only to 2.5 per cent.

But Howard Archer at IHS Global Insight demurred, saying that oil price rises would pressure CPI upwards, so that it rose 2.6 per cent in August - as in July.

Chris Williamson at Market went even further, suggesting that the shocks to oil prices could have provided sufficient upward pressure to move inflation up - and further away from the Bank of England's two per cent target.