NIESR Monthly CPI Tracker - Large Falls in Underlying Inflation Ahead of Tomorrow’s MPC Meeting

Despite the minimal fall in the headline rate, it is encouraging that measures of underlying inflation fell substantially: core CPI rose by 6.2 per cent in the year to August, down from 6.9 per cent in July; annual services CPI inflation fell to 6.8 per cent in August from 7.4 per cent in July; and NIESR’s trimmed-mean CPI inflation estimate decreased to 7.9 per cent in August from 8.6 per cent in. [...] Core CPI rose by 6.2 per cent in the year to August, down from 6.9 per cent in July; annual services CPI inflation fell to 6.8 per cent in August from 7.4 per cent in July; and NIESR’s trimmed-mean CPI inflation estimate decreased to 7.9 per cent in August from 8.6 per cent in July. [...] Seeing that pay in the services sector makes up most of the input costs in this sector, it is the main driver of services CPI inflation, which today’s data suggests was 6.8 per cent in August. [...] Figure 3 – Total average weekly earnings in the services sector Source: ONS NIESR’s measure of underlying inflation, which excludes 5 per cent of the highest and lowest price changes, fell to 7.9 per cent in August from 8.6 per cent in July. [...] The ONS recently released a new measure of persistence in CPIH inflation, identified as the part of inflation which is common to all goods and services in the index.