Business

UK inflation: Twitter Q&A with Hugh Pym

Hugh Pym answering your questions
Image caption Hugh Pym answering your questions

The rate of consumer price index (CPI) inflation increased to 2.9% in June, up from 2.7% in May, according to the Office for National Statistics (ONS).

The figure, a 14-month high, was lower than the 3% expected by markets.

But what does this mean to you?

The BBC's chief economics correspondent Hugh Pym answered your questions via #AskBBCHugh in a live Twitter session on Tuesday, 16 July.

This is an edited version of the session.

Question from Phil Corbishley on email: Food, rent, petrol. My inflation has gone up 15% higher than 2.9% Why the discrepancy?#AskBBCHugh

Hugh Pym answers: 2.9% is the average - some individuals will have lower inflation, some higher, depending on spending patterns #AskBBCHugh

Question from Andrew Radcliffe on email: How does good weather affect inflation? #AskBBCHugh

Hugh Pym answers: Bad weather saw retailers cutting summer clothes prices last year, but not so much now - so prices up over 12 months #AskBBCHugh

Question from @HeyMoses on Twitter: Do you think the 'basket of goods' CPI uses to measure inflation needs to be reviewed more regularly?

Hugh Pym answers: Hard to review more often than annually - takes a bit of time to work out new consumer trends #AskBBCHugh

Question from @DannyWittenberg on Twitter: As a 15-year-old - will inflation go on indefinitely, and how might it affect future generations? #AskBBCHugh

Hugh Pym answers: Inflation will continue - but whether its low or high depends on global demand for resources - eg food and oil #AskBBCHugh

Question from @steveruffley on Twitter: how do you control inflation without increasing interest rates? Allowing people to repay debts?#AskBBCHugh

Hugh Pym answers: Inflation above target for some time - Bank of Eng more worried about lack of growth; prob will stay that way for a while #AskBBCHugh

Question from @CraigMJohnston on Twitter: With interest rates so low and inflation wiping out any real return, where would you put your money? #AskBBCHugh

Hugh Pym answers: Many investors have been switching to shares as they offer growth - but highly volatile over last few months #AskBBCHugh

Question from Darrell Bilton who emails :Are there any benefits to having higher inflation? #AskBBCHugh

Hugh Pym answers: Inflation bad for savers, good for borrowers - value of debt will be eroded by inflation #AskBBCHugh

Question from @ticfever: if inflation maintains itself at 3%, the upshot is, if we don't get =>3% pay increases, we get a real pay cut?#AskBBCHugh

Hugh Pym answers: Correct - inflation nearly 3%, ave pay rises less than 1% - so spending power eroded - real pay cuts #AskBBCHugh

Question from Stuart Colley on email: Pay rises are less than inflation. Demand for goods & services also low. So what is causing our inflation? #AskBBCHugh

Hugh Pym answers: Global pressures - food and oil prices rising - affecting UK consumer prices - weaker pound also raises import costs #AskBBCHugh

Question from @garcius_maximus on Twitter: How will inflation affect interest rates? When do you think interest rates will go up?#AskBBCHugh

Hugh Pym answers: Markets don't expect rate rise till mid 2015, Paul Fisher of Bank of Eng said today " potentially years in future" #AskBBCHugh

Question from @Alice_Nuisance on Twitter: is it true that the average basket used to calculate inflation contains champagne? #AskBBCHugh

Hugh Pym answers: Yes - champagne removed from inflation basket ( or bucket??!) in March this year #AskBBCHugh

Question from @FFfortisimo on Twitter: At what point does inflation become hyperinflation? #AskBBCHugh

Hugh Pym answers: Hyperinflation=ruinous/out of control - nowhere near that - but even 5% eats a lot into savings over a few years #AskBBCHugh

Question on email from Gary Miles: Why are airfares included? Hardly one of the things bought by an average household on a weekly basis? #AskBBCHugh

Hugh Pym answers: The inflation basket is wide ranging and covers a lot more than everyday items - more holidaymakers fly these days #AskBBCHugh

Question from @DuncanStott on Twitter: When my rent goes up, am I consuming more housing service (GDP growth) or is it price increase (inflation)? #AskBBCHugh

Hugh Pym answers: GDP growth in real (inflation adjusted) terms - rental costs are part of the CPI inflation basket ie price rise/cut #AskBBCHugh

Question on Twitter from @Phillipe_Flop: Should the mpc increase interest rates if inflation is cost push? Or only if demand pull? #AskBBCHugh

Hugh Pym answers: Depends if costs/demand are UK generated rather than imported - limited homegrown inflation right now #AskBBCHugh

Question from @tintinmedia on Twitter: Does high inflation guarantee more jobs, high growth. What shld be done 2 get benefits from it? #AskBBCHugh

Hugh Pym answers: A bit of inflation boosts corporate income so should help growth - too much will erode savings and damage confidence #AskBBCHugh

Question from @tommylennard on Twitter: Would protectionist measures allow economy to boom as confidence will rise or cut off international trade?

Hugh Pym answers: Would make imported goods expensive and push up inflation, also hit investment - some claim it protects jobs #AskBBCHugh

Question from @AlexARTPOP on Twitter: Which is more damaging, soaring inflation or massive deflation? #AskBBCHugh

Hugh Pym answers: Both v damaging - deflation hits jobs and growth, inflation erodes savings and hits investment #AskBBCHugh

Question on Twitter from @J4mesOw3n: In ten years' time, will I still be able to get drunk off of £10? #AskBBCHugh

Hugh answers: Hard to do that in some places now! #AskBBCHugh

Thank you for your questions, sorry I didn't get to answer them all.

And thank you for all the off-topic ones including my underwear, bike tyres, cricket, balloons and fire engines. @andrew19martin use a bike pump! #AskBBCHugh