INVESTING in energy security by building up domestic supply will help keep inflation low, the TUC said today, after rates crept up for the first time this year.
The Office for National Statistics (ONS) said the consumer prices index measure of inflation rose to 2.2 per cent last month, up from 2 per cent in June — the first time it has climbed since December.
Most economists had predicted a sharper increase but an expected drop-off in energy bills failed to materialise last month.
The retail prices index, which measures a representative group of retail goods and services, was 3.6 per cent for July.
ONS chief economist Grant Fitzner said: “Inflation ticked up a little in July as, although domestic energy costs fell, they fell by less than a year ago.”
A larger than expected inflation fall in services — hospitality and culture — to 5.2 per cent for the year to July, has raised hopes of an interest rate cut by the Bank of England next month.
Resolution Foundation economist Lalitha Try said: “The first rise in inflation in seven months may sound like bad news, but in fact the small size of the increase — and the sharp fall in services inflation that lies behind it — is good for both consumers and policy-makers.
“The price of domestic services such as restaurants and leisure activities have replaced food and energy bills as the focus of price pressures — for now at least.
“Keeping a lid on these price rises will hold the key to keeping overall inflation close to target and getting interest rates down.”
TUC general secretary Paul Nowak said: “The Conservatives failed to protect families from surging prices, rocketing interest rates and a living standards crisis.
“But with a new approach the government can keep inflation low, ensure rates keep falling, and get wages rising.
“Inflation has been driven by problems like high energy prices, not by wages.
“The Bank of England should continue to ease pressures on families and businesses by bringing interest rates down.
“The government’s plan to boost workers’ rights can be a game changer, driving up productivity and making work pay.
“And if we invest in industry, including energy security with our own national supply, we can better control future inflation.”
