Inflation 'soon to fall' says economist - commercial mortgages

14 August 2008

Although the Office for National Statistics (ONS) recorded a major jump in inflation this month, the rate should soon start falling again, an economist has predicted.

CPI jumped a record 0.6 per cent in a month to 4.4 per cent in July but Charles Davis from the Centre for Economics and Business Research said that the situation at present is not as bad as it may seem.

He said: "If you look at the actual month on month figures prices were flat in July, there was a 0.0 per cent growth in the consumer price index for June and July."

The reason CPI went up was that in the equivalent period of 2007 prices actually fell, he stated.

Mr Davis added that as the economy slows in the months ahead inflation will fall.

This could help the Bank of England to cut interest rates, something that may reduce the cost of commercial mortgages.

Food was a key contributor to the recent hike in inflation with a 13.7 per cent rise in the last year, the ONS said when it released the latest CPI statistics this week.