Once again, as in June, homeowners’ replacement cost (4.1%) made the largest contribution to the annual CPI inflation rate. Ostensibly an index of new dwelling prices, the July annual change actually reflects the annual change for June 2017, since the new housing price data on which it is based can only be incorporated with a lag. So the discrepancy between the housing price increases shown between this series and the Teranet National Bank HPI is staggering: it shows an annual increase of 14.2% for June. It can’t be explained by the replacement cost index incorporating changes in VAT since if this were done properly (not that it is) this would tend to make the replacement cost series show higher rates of inflation, the effective VAT rates going up due to rising house prices even when the rates themselves stay the same.