BRITISH inflation fell to the Bank of England’s 2 percent target last month in an unexpectedly sharp slowdown that economists said was most likely a blip as the reopening of the economy after lockdown drives prices higher.

Economists polled had expected yesterday’s official data to show a 2.3 percent rise in consumer prices in July following a 2.5 percent rise in June.

Sterling showed little reaction to the figures as investors judged they were unlikely to alter the rising trend for inflation and would not sway Bank of England policymakers much.

Earlier this month, the Bank of England said it expected to tighten monetary policy moderately over the next three years.

July’s slowdown in inflation reflected a jump in prices in the same month last year when Britain’s economy was emerging from its first coronavirus lockdown.

Prices of clothing and footwear and computers, games and toys also dragged on the rate of price growth last month, the Office for National Statistics said.

“The fall in year-on-year inflation last month masks the strength of inflationary pressures currently within the U.K. economy,” Yael Selfin, chief economist at KPMG UK, said.

Earlier this month, the Bank of England said it expected inflation to jump to 4 percent around the end of the year, which would be a decade high. But the Bank of England stuck to its view that the acceleration of inflation would prove to be temporary.

“We see inflation falling back to around 2 percent at the end of next year as production facilities expand, requiring only minimal tightening by the Bank of England in the short term,” Selfin said. (SD-Agencies)