India's consumer inflation is expected to have picked up in July after easing for three straight months, with food prices back on the rise, but is expected to remain well below the central bank's target. But, even though the United Kingdom has above target inflation, growth companies are benefitting from low interest rates, which is why the UK's AIM market has had a stonking year, as you can see in the chart below.
"Policy rates have likely plateau'ed for now, with room for rate cuts requiring a sharp downward drift in core inflation or growth slump in FYH2".
Food prices are still rising, as are the costs of clothing and household goods.
The pound fell around 0.4% against the dollar to change hands at 1.2909, the lowest since July 14, before paring the decline to around 1.2922 by 09:40 London time.
"Most of the currency-related inflation bump is behind us", Barclays economist Fabio Fois wrote in a note to clients. Good rainfall and reduced global crude oil prices will help keep inflation levels in check. 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. Input prices for factories increased 6.5 percent on the year, compared with a 10 percent rate in June.
GETTY- STOCKFigures are tipped to record that inflation rose by 0.1 percentage points
"While inflation has plateaued in recent months, current levels are nonetheless placing significant pressure on consumers", said Jack Coy, economist at the Centre for Economics and Business Research.
Annual input price inflation peaked at 19.9% in January, and has been slowing every month since then.
Inflation is expected to have accelerated when official figures are released on Tuesday, maintaining the squeeze on cash-strapped households struggling with low wage growth.
British pound slumped to a one-month of 1.2851 against U.S. dollar and extended weakness to a fresh 10-month low against the euro.
While inflation is forecast to rise again, it is thought ONS data on Wednesday will show that wage growth has stalled at 1.8%.
Andrew Sentance, former United Kingdom central banker and senior economic adviser at PwC, said the jury is still out, however, on whether United Kingdom inflation could still rise higher later this year to around 3%. The Japanese yen, Philippines peso, Chinese offshore, and Thai baht were up 0.1-0.5 percent.