Inflation to stay above 4pc

INFLATION in the UK could have slowed further in July, yet is expected to spike again in late summer and during autumn.

July’s consumer price index (CPI) and retail price index (RPI) figures are set for publication this morning, with some analysts forecasting a fall to 4.1 per cent in the CPI, and for the RPI to dip below five per cent.

CPI inflation soared to 4.5 per cent in the second quarter of the year, yet unexpectedly tamed to 4.2 per cent in June – still over twice the rate of the Bank of England’s two per cent target.

Yet the Bank has recently firmed up its dovish outlook, suggesting it will keep rates at their historic low of 0.5 per cent. The loose policy has seen a “modest reduction” in quotations for fixed rate mortgages, according to Nomura economist Philip Rush.