Tucked between the news on GDP, the latest consumer price index numbers show inflation continuing to decelerate (log annual and monthly changes):
The overall index is down, core inflation increased slightly on the month, but was offset by a decrease in the pain index. In fact the annual rate of increase in food and transport prices is now at its slowest pace in more than two years (since March 2010).
Food prices are still rising faster than anything else (log annual and monthly changes):
…but its been offset by drops in the price of RON97 petrol and in clothing prices. The result is that the overall price level was unchanged between June and July.
If this continues, I think overall inflation this year is on pace to drop to 1.6%, about the same rate as 2010 and about half the rate of 2011.
July 2012 Consumer Price Index report from the Department of Statistics