UK inflation rate rises to 0.1% although food prices are still falling

Higher clothing prices and a rise in the cost of education have lifted inflation to 0.1%, figures published by the Office for National Statistics have shown.

The 0.1% consumer price inflation rate for July, based on a basket of goods and services, comes after 0.0% in June. Food prices fell in the month, continuing the trend of falling grocery prices as supermarkets embark on a bitter price war.

Samuel Tombs, senior UK economist at analyst firm Capital Economics, said that the rate "merely reflects a slight shift in the timing of summer discounting of clothing and so has little bearing on the timing of the first interest rate rise".

He added: "Indeed, clothing inflation snapped back from -0.8% to +1.7% – boosting the headline inflation rate by 0.2 percentage points – since the usual period of summer price reductions happened a little earlier this year than in 2014."

Along with food prices, transport was the biggest faller, despite a report by the Trade Union Congress, which found train fare prices increased by 25% between 2010 and 2015, far ahead of the average 9% increase in wages over that period.

Tombs added that output prices dropped by 1.6% compared with July 2014. He added: "Long time lags between changes in import prices and shop prices mean that sterling's recent appreciation will keep a lid on CPI inflation until the end of 2016."

The weak outlook on inflation have caused analysts to believe an interest rate increase in 2015 would be too soon. However, Monetary Policy Committee Kristin Forbes recently warned of the danger of prolonged near-zero interest rates.