Sunday, August 16, 2015
Weak oil prices and the strength of the pound are expected to have kept inflation flat in the year
Britain came within touching distance of deflation again in July, increasing the likelihood that the Bank of England will postpone its first rate rise in more than eight years. (Read between the line, and given that eight years of 0.5% interest rates is not enough to get about 0% inflation, clearly, a rate cut is the only thing that will possibly cause inflation to rise). British Gas meanwhile has decided to slash tariffs 5%, with others expected to follow suit, so deflation should accelerate through the Autumn, noting that this co-incides with the end of the US driving season, so gas prices should also fall more than most anticipate.