Inflation retreats - but it's coming back

Britain's inflation figures delivered some unexpectedly good news this week. But whilst the immediate pressure on the BoE to hike rates has eased, the long-term outlook remains grim.

Britain's inflation figures have for a change delivered some unexpectedly good news. The Consumer Price Index (CPI) posted the biggest monthly drop in seven years in July, taking the annual rate of inflation to 1.9% from June's 2.4%; it's the first time since the spring of 2006 that inflation has undershot the Bank of England's 2% target. Sterling fell below the $2 mark as the threat of another interest-rate hike appeared to recede.

Behind the numbers

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