House prices continue to soar ahead of consumer and producer price inflation in most regions. Factory gate prices fell again in the year to August, by 1.8% (they fell 1.6% in the year to July) and consumer price inflation was zero. House price inflation in the year to July was 5.2%, although that was slightly less than the 5.7% it had been in the year to June. (House price figures lag a month behind other figures).

The low inflation rate is in spite of the £375billion of qantitative easing by the Bank of England up to 2012, since when the only further injection of cash has been from the reinvestment of maturing bonds, which has kept the QE stock at the same high level. That, and specific measures to encourage banks to lend to companies, has made money available at low rates of interest, which does seem to have encouraged firms to increase capital investment.

QE was supposed to put consumer price inflation back on to the Government's target of 2% a year, which it has clearly not done yet. 

House price annual inflation, which is not included in consumer price inflation, was 5.6% in England, 0.3% in Wales, 7.4% in Northern Ireland and -1.3% in Scotland. Annual house price increases in England were driven by an increase in the East of 8.3% and the South East of 6.7%. Excluding London and the South East, UK house prices increased by 4.4% in the 12 months to July.

Across the country, prices paid by first-time buyers were 4.4% higher and for owner-occupiers (existing owners) they were up 5.5%.