‘Short-lived boost’ for consumers

THE rate of inflation is expected to slow in figures released today but economists warn any fall in the cost of living is likely to be short-lived.

By The Newsroom

Published 18th Sep 2012, 07:00 BST

The consumer price index (CPI), which hit a 31-month low in June before unexpectedly rising to 2.6 per cent in July, is likely to ease back to 2.5 per cent or less in figures for August published by the Office for National Statistics.

But the squeeze on consumers is expected to return as droughts in the United States are likely to mean higher food prices while petrol pump prices are creeping higher and more energy price hikes are in the pipeline this autumn.

Victoria Clarke, economist at brokers Investec, has forecast a rate of inflation of 2.3 per cent today but warned CPI will begin rising early next year. The forecasts will trouble the Bank of England, which is tasked with keeping inflation as close to the Government’s two per cent target as possible.