Increase in UK inflation fuels debate over interest rates
The Consumer Price Index (CPI), a key measure of UK inflation, rose from 0% by 0.1% in July 2015. The increase has been attributed to increases in airfares and clothing prices. The core rate of inflation, which excludes items which are subject to higher price volatility (such as energy and food) increased from 0.8% to 1.2%.
Although these increases in inflation are modest at best, they are raising the questions as to when interest rates are likely to rise. Experts predict however that this will not occur in the near future as inflation is well below the Bank of England target of 2%.
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