Britain's inflation rate slowed as expected in July thanks to lower prices of furniture, according to official data today.
The Office for National Statistics (ONS) said consumer prices fell by 0.1 per cent last month, bringing the annual rate of inflation down a tenth of a point to 2.4 per cent.
But that remained above the Bank of England's 2 per cent target and may also prove to be a temporary easing as higher university fees and household bills are expected to raise inflation further in the coming months.
The Bank of England raised the cost of borrowing for the first time in two years this month on worries that faster growth will keep inflation above target for a while.
It forecast last week that the CPI rate could rise up to around 2.7 per cent this year and Governor Mervyn King said there was a 50-50 chance inflation could creep up above 3 per cent within six months.
As such, most analysts expect the central bank to raise interest rates again, perhaps as soon as November.
The ONS said the biggest downward contributor came from furniture and household equipment prices - which fell at their sharpest annual rate since December 2000.
The biggest upward contribution came from food and non-alcoholic beverages, the cost of which rose at their steepest rate since February 2002.