UK: Headline Inflation eases slightly to 2.8% in July 2013 - ICICI Bank : Treasury Research

- Headline inflation softened slightly to 2.8% YoY in July 2013, as against 2.9% in the previous month. Core inflation, on the other hand, eased to 2.0% YoY last month, as against 2.3% in June 2013.

- A deceleration in inflation was primarily due to lower contribution by air fares, 'clothing & footwear' and 'recreation & culture' sectors, while a rise in petrol & diesel partially offset the deceleration.

- We expect inflation to stay at 2.8% YoY for August 2013, before peaking at 3.0% in September.

- A look at Producer's Price Index (PPI) reveals that crude prices in July grew at the fastest pace in the past 16 months and non-crude imported inflation has also risen in the past two months. However, with lower base effect, these components are expected to ease in August 2013.

Source : Equity Bulls

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