Higher-than-expected inflation defies forecasts

The City was caught on the hop today with data showing higher-than-expected inflation last month. Consumer prices were unchanged in July from June, keeping the annual rate at 1.8 per cent – defying analysts’ forecasts of a fall to 1.5 per cent – government figures showed this morning. But the City and the Bank of England still expect inflation to dip to 1 per cent or below in coming months. The largest upward effect on consumer prices came from computer games and DVDs where prices rose this year but fell in July last year, the Office for National Statistics said, while food price inflation was the slowest since records began in 1997.