Inflation drop is ‘temporary’

INFLATION fell from 2.5 per cent to the Bank of England’s two per cent target – but this is likely to be a temporary decline.

The Office for National Statistics figures for July were explained by summer sales holding back prices.

However, Samuel Tombs at

Pantheon Macroeconomics, said that in hospitality and tourism,VAT relief will start to be removed this month.

He said businesses will pass that increase in costs to consumers, as they will energy price rises.

Mr Tombs added: “The headline rate is on course to rise sharply.”