Although core CPI inflation remains muted at 1.6% in July, the surge in prices last month specifically could be the start of a more significant rebound, as the added costs and ongoing supply constraints stemming
from the pandemic and physical distancing offset the disinflationary impact from weak demand. The prices of the goods and services that fell most sharply at the start of the pandemic – like air fares, hotel room rates
and motor vehicle insurance rates – are now rebounding, while low inventories explain the surge in motor vehicle prices. With unit labour costs up sharply in the…

Read the publication Rebound in inflation has further to run on the Capital Economics Website.

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