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Fuel inflation is bucking the trend – it’s up.
And that’s slowing down the improvements we’re seeing in inflation overall.
But petrol and diesel prices are down since last August. How can that be?
It’s because the year-on-year changes in fuel prices that determine the inflation number have slowed down significantly.
From July 2022 to July 2023, petrol fell by about a quarter (from a peak of £1.89 per litre to £1.43). You can see that in the blue dots below.
But August to August, they didn’t fall nearly as much (from £1.75 to £1.48) – the fall for the red dots is smaller.
And since the fall is less impressive, fuel inflation is looking worse.
Part of the reason for shallower year-on-year fall is a rise in petrol and diesel prices this August.
But it’s mainly because the huge fall from last July’s peak price is no longer being counted.
So it’s fair to describe some of this as a “blip” – as long as fuel prices settle down.
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