Increasing fuel costs were the largest driver of inflation in July, as the cost of living rose 1.7 per cent from a year earlier.

Inflation, as recorded by the Consumer Price Index, published today by the Department of Statistics, edged lower to 1.7 per cent from 1.8 per cent in June.

The fuel and power sector rose 9.7 per cent year over year and it was up 3 per cent from June. A significant factor was a 9.5 per cent increase in the fuel adjustment rate on Belco bills in July.

Higher prices for premium fuels also drove 3 per cent annual inflation in the transport and foreign travel sector. It was also up by 2.4 per cent month to month.

The average cost of airfares and overseas hotels increased 8.3 per cent and 5.6 per cent, respectively, from June.

Food prices rose 2.6 per cent from July 2016 and 0.2 per cent for the month. Fuelling

the increase was a 4.5 per cent rise in the cost of flour, while rice prices were up 2.3 per cent and fresh tenderloin was up 2 per cent.

The CPI data showed that the basket of goods and services that cost $100 in April 2015 now costs $103.90.