British inflation holds steady in July at 2

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As per the ministry's data, retail inflation in July was pushed higher by a rise in prices of cereals, milk-based products, meat and fish.

The rate of consumer prices index (CPI) inflation remained at 2.6 per cent last month, the Office for National Statistics (ONS) said today.

He said: "The weekly data from Department for Energy and Climate Change suggests petrol prices fell by more than 1% in July and, with fuel costs having risen by nearly 1% in the corresponding period of past year, this will put further downward pressure on inflation in July".

Separately, skyrocketing tomato prices propelled inflation at the wholesale level to 1.88% in July from 0.9% in June, with the food category overall contributing significantly to the uptick in WPI terms.

The data showed that wholesale inflation for manufactured products rose 2.18% in July 2017 as against the same month of previous year. The median three-years-ahead inflation expectation slid down to 2.71% in July from 2.78% in the prior month.

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However, the impact of the devaluation of Sterling following the Brexit referendum result are now washing through the system and the fall in input price inflation for producers from 10% in June to 6.5% in July shows how the impact is abating.

Wholesale price inflation (WPI) in India stood at 1.88% in July 2017.

Input prices are a leading indicator for consumer price inflation as higher input prices are often ultimately passed on to the consumer, and therefore a lower number here could bode well for softer consumer prices down the line.

United Kingdom inflation continues to trade above the central bank's target of around 2% due to increased input price pressure.

Alan Clarke, head of European fixed income strategy at Scotiabank, is predicting CPI to hit 2.8%, driven in part by rising price tags on food.

"The recent rise in the price of oil, the further weakness of the pound against the euro, along with a resilient economy, albeit growing at a slower pace, are all likely to encourage further rises to consumer prices".

The inflation for housing increased to 4.98%, while that for miscellaneous items was flat at 3.28% in July 2017.

Data due on Wednesday is likely to show average pay rises of around 2 percent are failing to keep up with the cost of living.

Delving into the detail, most categories usually moved as was anticipated, with seasonal effects pushing airfares up by 17.9 percent, while declines in clothing & footwear and furniture prices gave an offset, noted Lloyds Bank in a research report.

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