BRITISH inflation edged down last month but house price growth surged in July at the fastest annual pace since in seven years, official data showed yesterday.
Consumer prices rose 1.5pc on the year in August, the lowest increase since May, compared to 1.6pc in July, the Office for National Statistics (ONS) revealed.
Food and non-alcoholic beverage prices fell by 1.1pc - the steepest decline since January 2003. An ONS official attributed the fall to competition among supermarkets and the effect of cold weather in early 2013, which pushed up food prices that year.
That supermarket war has pushed down the prices Irish farmers and food producers can command for their produce in their biggest export market.
Compared with the previous month, the consumer price index in August was up 0.4pc, the ONS said.
The data are unlikely to shift expectations among economists that the Bank of England will keep interest rates on hold until around the second quarter of next year.
BoE governor Mark Carney said last week the central bank may start to raise interest rates next spring if the labour market continues to recover from the financial crisis.
Separate data from the ONS showed house prices in Britain rose 11.7pc in the year to July.
Some other surveys since then have suggested the rapid pace of house price growth has started to cool.
In London, which led house price growth earlier this year, property prices rose 19.1pc on the year, down slightly from 19.3pc in June.
Until December last year, annual inflation exceeded the Bank of England's 2pc target every month since December 2009, eroding the spending power of households and making the fall in living standards a big political issue ahead of next year's election.
However, the current eight-month run of consumer price inflation below 2pc is the longest since a multi-year stretch which ended in May 2005.
That has helped the Bank of England to hold off on raising interest rates despite Britain's surprisingly strong economic recovery.
The ONS said the biggest negative contributions to inflation in August were motor fuels, food and non-alcoholic beverages and furniture.
An underlying measure of inflation, which strips out increases in energy, food, alcohol and tobacco, rose by 1.9pc in August compared with the same month last year.
Data also released by the ONS yesterday showed that factory gate prices fell by 0.3pc in annual terms, the steepest decline since September 2009. Economists had predicted a 0.2pc decline. (Reuters)