Core inflation in the UK has begun to fall in the past two months, according to an official estimate based on a more sophisticated statistical analysis than used in the standard approach.
In an article published on Monday, the Office for National Statistics said that when it looked at the common elements of inflation that existed across all the prices it measured, it found the underlying annual rate had dropped to 6.8 per cent in July, down from 7 per cent the previous month and 7.3 per cent in May.
In contrast, last week’s official inflation data showed that the standard core measure fell from 7.1 per cent in May to 6.9 per cent in June and unexpectedly stuck there in July. Inflation in services, often quoted by the Bank of England as the best gauge of domestic price pressures was 7.4 per cent in May and in July with a small dip in June.