Britain’s annual inflation rate rose to 0.1 percent in July, up from zero the previous month, official data showed Tuesday.
An underlying measure of inflation, which strips out increases in energy, food, alcohol and tobacco, rose to 1.2 per cent in July – the highest yearly increase since February – from 0.8 per cent in June.
Prices have barely risen over the past year and even excluding food and energy, prices are only up 1.8%.
The Labor Department’s gauge of wholesale prices, which includes 75 percent of all U.S. goods and services, climbed 0.2 percent in July after a 0.4 percent gain the month before.
The rate of inflation in the UK rose to 0.1% in July, according to the Office of National Statistics (ONS).
The Federal Reserve’s target for price stability is 2.0 per cent inflation over the longer term.
Energy prices decreased 0.5 percent in July after jumping 3 percent in June.
Many private economists believe the Fed will start to raise interest rates in September given that the unemployment rate has now fallen to a seven-year low of 5.3 percent. That was on top of a 0.3 percent again in June.
Maike Currie, associate investment director at Fidelity Personal Investing, said the marginal rise in inflation “puts the rate rise debate back on the table”.
The Federal Reserve is looking for inflation to firm gradually as it considers when to raise short-term interest rates for the first time since 2006.
It is expected that UK inflation will remain subdued as it battles the combined impact of a stronger pound and falling oil prices.
Consumer inflation slowed in July following two months of slightly faster gains.
The rate was a small increase on May’s figure of 5.6 per cent, and now takes the average price for a home to a record high of £277,000.
An economic slowdown in China and Europe has also curtailed global demand, which can limit price increases.
He said: “While households will have seen individual prices rise and fall, the overall shopping basket bought by the country remains little changed in price compared with a year ago”. “With price inflation and wage growth still muted, a case can also be made for waiting”.