UK inflation accelerated more than expected in July

UK inflation accelerated more than expected in July. The growth in consumer prices remains around one of the highest levels in the last year and a half. Consumer prices rose by 0.6% yoy in July 2016, after rising 0.5% in June. According to the statistical office of the main factors for the acceleration of inflation are rising prices of fuel, alcohol and hotel rooms. The food prices report slight decline on year-on-year basis. The upward pressure is partly offset by a decline in rents of social housing and lower prices on some toys.

The core inflation, which excludes volatile prices of fuel, alcohol and food, reached 1.3$% in July 2016, slightly below the level of 1.4% in June.

The data was collected shortly after Brexit referendum in June 23. The result of the vote led to the collapse of the pound and raise expectations that inflation will hurried sharply as Britons will pay more for imported goods.

UK inflation is below the 2% target level of the Bank of England for two and a half years. Last year inflation even reached zero, which was its lowest level since 1950.

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