London
“Whilst the latest headline inflation numbers have finally followed the Bank of England’s repeatedly re-written script, there will be little cause for celebration in the hallowed halls of Threadneedle Street,” says AJ Bell’s Danni Hewson. The year-on-year rise in overall consumer prices slowed by 0.1 percentage points to 6.8% in July as expected, because of the effect of the new, lower energy price cap. Food prices are also rising less fast, and the price of some staples is actually falling. But strip out food and energy and annual “core” inflation remained stuck at 6.9% for July – higher than headline inflation. “In other words, the conceit that the inflationary surge of the past year is just some one-off adjustment to a post-pandemic supply crunch is bunk,” says Ross Clark in The Spectator. “Inflation is embedded… and worse, it is feeding into wage rises, bringing us to what looks suspiciously like the beginning of a wages-prices spiral.” Pay, excluding bonuses, is rising by 7.8% – a now real-terms pay rise after inflation.
