Consumer price inflation may start to drop more quickly than forecast after the British Retail Consortium reported that the pace of food price rises was slowing
Prices in shops have finally started to slow significantly in a sign that the inflation crisis may be coming to an end – meaning the Bank of England may be able toThe cost of retail items is continuing to increase, with food prices experiencing double-digit inflation, but the rate hasThe British Retail Consortium said prices in August were up 6.9 per cent on a year earlier, down from a rate of 8.4 per cent in July.
Treasury officials believe the slowdown in shop inflation is a sign that “continued drops in input costs are being fed through”, a source told, with lower energy and commodity prices finally resulting in more moderate increases in costs to shoppers. Consumer price inflation, which measures services as well as goods, stood at 6.8 per cent for July and had been forecast to rise slightly in August.to limit the extent of future interest rate rises. Conservative MP John Baron, a member of the Commons Treasury committee, said: “There is a risk of overshoot here.
The committee which sets rates risks “compounding its original error” by raising once again, he added. Most economists believe that the Bank will raise rates to 5.5 per cent next month with some calling for an extra-large increase to 5.75 per cent, although others are worried about the risk of a recession if higher interest rates substantially reduce economic activity.
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