The UK economy is no longer wearing a zero inflation rate. According to data released by the Office for National Statistics (ONS), the consumer price index (CPI) showed inflation had risen slightly to 0.1% in July. This was a surprise to most experts that believed inflation would remain at zero.

The ONS reported that despite the decline in cost for food and fuel it was not enough to counteract the rising cost of clothing and airfares.

Richard Campbell, head of the CPI with ONS, said, “This is the sixth month running that headline inflation has been at or very close to zero. While households will have seen individual prices rise and fall, the overall shopping basket bought by the country remains little changed in price compared with a year ago.

“The latest slight increase is mainly due to clothing, with smaller price reductions in this year’s summer sales compared with a year ago. Food and motor fuel prices continue to fall and have helped stop a larger rise in the rate of inflation.”

Inflation fell into the negative inflation territory in April. The Bank of England’s target rate is 2%, but inflation has been below the target rate for 19 months. Excluding volatile items such as energy and food, and the core rate of inflation rose to 1.2% from June’s level of 0.8%, which is the highest recorded level for five months. Adding in housing costs to obtain the retail price index (RPI) the rate stood steady from June to July at 1%.

The fact that inflation has risen and may continue to do so will fuel debate over when interest rates are likely to be raised by the Bank of England’s rate setters the Monetary Policy Committee (MPC). The current historically low rate of 0.5% has gone unchanged since March 2009. Since then borrowers including home buyers and homeowners have enjoyed the opportunity of having low interest rate offers on mortgages and remortgages.

Changes to the current low interest rate offers could occur before the MPC makes a move because funding for lending has increased and lenders will be putting that cost onto consumers. Those seeking mortgages and remortgages should start shopping around now according to experts while deals are so attractive.