The Office on National Statistics on Tue 16th Aug 2016, published the latest view on consumer price inflation.
CPI, Consumer Price Inflation is defined as the rate at which the prices of goods and services bought by households rise or fall. It is estimated by using price indices. A way to understand this is to think of a very large shopping basket containing all the goods and services bought by households
These figures are post Brexit and thus the devaluation of Sterling.
The Consumer Prices Index (CPI) rose by 0.6% in the year to July 2016, compared with a 0.5% rise in the year to June.
“The CPI 12-month rate (the amount prices change over a year) between July 2015 and July 2016 stood at 0.6%. This means that a basket of goods and services that cost £100.00 in July 2015 would have cost £100.60 in July 2016”
The ONS and I quote “The main contributors to the increase in the rate were rising prices for motor fuels, alcoholic beverages and accommodation services, and a smaller fall in food prices than a year ago.”
Now we know oil (prices for motor fuel) is priced in US$. So now more pounds are needed to buy the oil.
The ONS are quoted to say “…previous trends with a particular focus on how movements in the sterling exchange rate may have influenced these data”
Evidence of Brexit affecting the price of goods.