According to the Office for National Statistics, Britain’s consumer prices increased by an annualized 2.6% in June. From May, prices have been unchanged. Analysts had expected a 2.9% rise on a yearly basis, at the same pace as in the previous month, and a 0.2% increase month-on-month after prices rose by 0.3% in May.
The core consumer price index, which excludes food, alcohol, tobacco and energy prices, advanced by 2.4% from a 2.6% rise in May. The data was shy of analysts’ expectations for the flat reading. According to experts, the UK inflation has been above the Bank of England’s target level of 2% since February 2017. The slowing pace of inflation prevents the tightening of the monetary policy in the UK. This is largely due to the weakening of the British pound.
The Bank of England’s Monetary Policy Committee (MPC) left its benchmark interest rate unchanged at 0.25%.Three out of eight MPC members voted in favor of the rate hike to 0.5%.
The next bank’s meeting is scheduled for August 2-3. Then, the BoE will also unveil its economic forecasts.
According to the ONS, the UK’s house prices grew at a much slower pace in May rising by 4.7% year-on-year. Food and non-alcohol prices edged down by 0.2% in June from the previous month. Prices for clothes and footwear fell by 1%, while prices for household goods went up by 0.4% and health services prices rose by 0.1%.
The retail prices index (RPI) increased by 3.5% on a yearly basis and edged up by 0.2% from July. The RPI index is used by many British employers as a starting point in wage negotiation.
