{"id":2795,"date":"2009-07-14T09:39:36","date_gmt":"2009-07-14T09:39:36","guid":{"rendered":"https:\/\/mmm.9dotdigital.ca\/?p=2795"},"modified":"2025-03-27T15:48:50","modified_gmt":"2025-03-27T15:48:50","slug":"uk-vat-adjusted-inflation-still-above-target","status":"publish","type":"post","link":"https:\/\/mmm.9dotdigital.ca\/?p=2795","title":{"rendered":"UK VAT-adjusted inflation still above target"},"content":{"rendered":"

Annual CPI inflation fell to 1.8% in June – below the 2% target for the first time since September 2007 – but the figures continue to be flattered by December’s VAT cut. Assuming 60% pass-through, inflation would have been about 2.5% in June in the absence of the reduction. (Note that the “CPI at constant tax rates” measure – which rose an annual 2.9% in June – assumes 100% pass-through.)<\/p>\n

The June result benefited from a big decline in annual food price inflation to 5.5% from 8.4% in May. This had been foreshadowed by last week’s producer price numbers, which suggest a further fall – see chart.<\/p>\n

“Core” inflation can be measured by the CPI excluding unprocessed food and energy. The annual increase in this measure fell from 2.1% to 1.9% in May but would be about 2.6% without the VAT cut, assuming 60% pass-through.<\/p>\n

CPI inflation averaged 2.1% in the second quarter – above the MPC’s 1.9% modal forecast in the May Inflation Report<\/em>.<\/p>\n

Food price inflation has fallen earlier than expected but in other respects today’s numbers are consistent with the forecast presented in a previous post<\/a>, suggesting that the annual CPI increase will slow to about 1% this autumn before rebounding into 2010. The retail prices index fell by an annual 1.6% in June – the decline may extend to about 2.5% this autumn.<\/p>\n

\"\"<\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Annual CPI inflation fell to 1.8% in June – below the 2% target for the first time since September 2007 – but the figures continue to be flattered by December’s VAT cut. Assuming 60% pass-through, inflation would have been about 2.5% in June in the absence of the reduction. (Note that the “CPI at constant […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3],"tags":[],"class_list":["post-2795","post","type-post","status-publish","format-standard","hentry","category-money-moves-markets"],"_links":{"self":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2795","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=2795"}],"version-history":[{"count":1,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2795\/revisions"}],"predecessor-version":[{"id":5104,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=\/wp\/v2\/posts\/2795\/revisions\/5104"}],"wp:attachment":[{"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=2795"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=2795"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mmm.9dotdigital.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=2795"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}