ISSUE NO. 15 · FRIDAY 21 AUGUST 2026

A five-year low in food inflation that nobody paid less for, £291,000 off the average Westminster home, and fifty years of index money

Food inflation slipped to 1.3% in July, down from 1.7% in June and the softest reading in nearly five years. Nothing behind that number got cheaper. Retailers are discounting everyday essentials to hold shelf prices flat, so the cost has landed on their margins rather than at your checkout — fish ran at 13.6% while pizza fell 8.5%. The rate is falling because someone decided to pay for it to fall.

Two more prices moved today for reasons that have little to do with supply meeting demand. Westminster's average home lost £291,000 in a year, a 25.4% fall, over the same twelve months the national average rose 2%. And tracker funds turned fifty, having pulled in $6.1 trillion over a decade while active funds bled more than $3 trillion, so the market now buys what is already big largely because it is already big. In all three cases the price is set by whoever is still willing to act on it, and in all three that group is getting smaller.

Below in full: why a five-year low in food inflation is a bill rather than a discount, what a quarter off a borough average says about the capital, and what fifty years of index money has done to the market it was built to copy. After those, the numbers, today's diary, and one calculator worth five minutes.

Lead

Food inflation fell to 1.3% in July. Nothing behind that number got cheaper.

It is down from 1.7% in June and the softest reading in nearly five years, the lowest since September 2021. Retailers describe it as shielding shoppers with heavy discounting, which is another way of saying the cost sits on their margins rather than at the till. The spread underneath is wide — fish ran at 13.6% while pizza fell 8.5% — so this is not a general easing so much as a set of decisions about which shelves to hold flat. The trade bodies that spent the spring braced for 10% have moved on to worrying about European droughts, and those drought-hit harvests land on the same books this autumn. Retailers are carrying the discount and manufacturers are carrying the contracts, and both are lobbying for the cost relief that keeps it going. Which is the tell: a number held down by choice has a shelf life. Read the full story →

The Numbers

CPI stays at July's 2.9% until next month's reading, and the gilt has kept climbing: 5.15% for August so far against July's 5.10%, now 1.40 points above a Bank Rate that has not moved since December. The index below is a settled close, dated on the card.

More News

Westminster's average home lost £291,000 in a year — a 25.4% fall.

That leaves the typical price at £854,000, and it is a borough average rather than one penthouse dragging the figure down. London as a whole slipped 2.5% to £554,000, a tenth consecutive month of falls, while the national average rose 2% to £272,000 across the same stretch. Kensington and Chelsea fell 14.7% to £1,250,000. The rest of Britain kept growing while the capital went the other way, which makes this a London problem rather than a British one — steep entry costs meeting hesitant international money. Garrington reads a £9,000 monthly gain as a floor forming; Knight Frank expects a flat year. Both are looking at the same data, which tells you how little the direction is settled, and the 28 October Budget will decide which of them was right. Read the full story →

Jack Bogle raised $11m for the first index fund in 1976 and was told it would fail.

Fifty years on, trackers hold the larger share of every long-term dollar in US funds. Vanguard's All UK Share tracker climbed 65% over five years while the average UK equity fund managed less than a third of that, and passive strategies pulled in $6.1 trillion over a decade while active funds lost more than $3 trillion. The reviewers who called the idea unpatriotic and lazy mostly retired without beating it. What has changed is not who won the argument but what winning did to the market itself: trackers are now large enough that the market does what trackers do, which is buy what is already big and then buy more of it. Passive was built to work alongside people arguing about price, not instead of them. Which leaves the question the next selloff will answer. Read the full story →

On the Diary

• Today, 7.00am BST — Retail sales, Great Britain, July. Whether households spent through the month the energy cap reset, landing in the same slot as the public finances.
• Today, 7.00am BST — Public sector finances, July. The borrowing side. Read with retail sales it frames what the Chancellor actually has to work with on 28 October.
• Today, 9.30am BST — Labour demand volumes by occupation, January 2017 to July 2026. Which jobs the vacancies have drained out of, over nine years. Slow-burn detail behind a labour market that has stopped moving.
• Monday, 9.30am BST — Data centres and the UK National Accounts. How the ONS proposes to count data centre investment, alongside a paper on measuring digital infrastructure. Dry, and it decides how much of the AI build-out shows up as British growth.

The Toolbox

One tool from the site each issue, picked to fit what has just happened. Free, no sign-up, and it shows its workings.

Junior ISA calculator

"Fifty years is the timeframe that made index funds look obvious in hindsight. Eighteen is the one most parents actually have, and this shows what it does to a monthly amount."

The Close

Three prices today, and not one of them was set by the thing that is supposed to set prices. Food inflation is 1.3% because retailers are absorbing it. Westminster is down a quarter because the buyers who used to set that price stopped arriving. And index money keeps buying the biggest company on the list without anyone forming a view on whether it is worth the money. A market works when enough people are willing to disagree about what something costs. On all three, it is worth asking how many are left.

If something here is wrong, or there is something you want dug into, just reply. It comes straight to me.

MJB