Inflation fell to 3.1% in July but has remained more than one percentage point above the Bank of England’s target, forcing Mervyn King, the bank’s governor, to write to George Osborne, chancellor, for the second time to explain why inflation is so high. Annual consumer price inflation declined in line with expectations from 3.2% in June and is down from 3.7% April, but has still been higher than 3% every month this year. The inflation rate as measured by the retail price index, an alternative measure of inflation used in wage settlements and commercial contracts, fell from 5% in June to 4.8%, a slightly larger decline than had been expected.

Topics