M&G warns on the 'worrying' inflation figures

Mike Riddell, a member of the highly-regarded M&G bond team, highlights the worrying aspects of June's inflation 'fall'.

The good news was that UK CPI fell from 3.2% to 3.1%. The less good news was that this was 0.1% higher than expectations and remains above the 3% upper bound (inflation hasn't been below 3% since December last year). The worrying news was that the Core CPI measure, which excludes food, alcohol, tobacco and energy prices, jumped 0.2% to 3.1%, and was 0.3% above expectations. Core inflation strips out the more volatile elements of inflation, and if you believe these elements are temporary in nature, then it provides a 'truer' picture of inflation. This is the highest core inflation rate...