Policy-wise, we think the Bank of England will continue to look through the inflation data, leaving rates unchanged. Inflation, which hit 2.9 percent in May, was barely positive when Britons cast their votes in the June 2016 referendum. Quarterly growth stood at 0.3% in the second quarter, the U.K.'s Office for National Statistics said Wednesday, a slight improvement on the 0.2% growth rate of the preceding quarter, but still less than half the pace of growth at the end of a year ago. "We're even getting to the stage in the year where the pound will be actually stronger than it was 12 months before, especially against the USA dollar", Wilson said. Against the euro, the pound dropped 0.3% to €1.097.
Motor fuel prices provided the biggest downward contributor, falling 1.3% between June and July, its fifth month of declines.
Producers' raw material costs fell 6.5 per cent in July down from a 10 per cent rise in June - the largest month-to-month slowdown in nearly five years.
"Even if the government intervenes for political reasons and limits the increase to, say, 3 per cent, a £5,000 season ticket will still cost an extra £150 a year in January".
The latest data will continue to dampen expectations of higher inflation and lead to greater doubts surrounding the potential for a Bank of England move to raise interest rates.
While the figures appear positive for squeezed households, Smith & Williamson's Global Inflation Linked Bond fund manager Thomas Wells says the impact of inflation on consumers is likely to be lagged.
UK Inflation Presents a Lose-Lose Scenario for Pound Sterling
"Moderating inflation means less pressure on the bank to consider raising interest rates, and will allow the MPC to remove the sticking plaster of ultra-low interest rates very slowly indeed". In a week where the ONS will also release UK Wages and Employment data (Wednesday Aug 16) and the latest Retail Sales numbers (Thursday Aug 17), today's data will help shape UK asset moves in the short-term.
And if the inflation spike has run its course, that would potentially be good news for consumers, especially if wage increases remain modest.
'Some unregulated fares are likely to go up much more.
Easing inflation is good news for the mostly domestic-driven United Kingdom economy.
Ben Brettell, senior economist at Hargreaves Lansdown said the unexpected fall to 2.6% raised hopes that United Kingdom inflation had peaked, as the Brexit-induced weakness in the pound started to fade.
"The Brexit-induced weakness in the pound has started to fade", he said.
New Thor: Ragnarok trailer finally shows Doctor Strange
We already knew Taika Waititi's take on Thor was going to be unusual , but we didn't know just how much so until the Japanese trailer for THOR: RAGNAROK was released .