UK inflation falls to 2.6% in June, businesses warn of temporary easing
7 reported
UK inflation slowed to 2.6% in June, dropping more than economists expected from 2.8% in May, according to the Office for National Statistics. The decline was partly driven by lower motor fuel prices, particularly diesel, and falling food prices including chocolate, margarine, and beef. Clothing prices also fell with the start of summer sales. However, businesses and economists warned that the slowdown may be temporary, citing renewed tensions in the Middle East and rising oil prices. The new chancellor, John Healey, said the government has more to do to help with the cost of living, noting recent measures including a VAT cut on electricity bills and a £2 cap on bus fares from January. The Bank of England’s Monetary Policy Committee is expected to keep interest rates unchanged when it meets next week, according to the Confederation of British Industry.
What’s reported
UK inflation fell to 2.6% in June, down from 2.8% in May, beating the expected 2.7%.
The drop was partly due to lower motor fuel prices, especially diesel, and falling food prices (chocolate, margarine, beef).
Clothing prices fell with the start of summer sales, with bigger discounts than last year.
Martin Sartorius of the CBI predicted inflation will ramp up over the coming months due to the Iran conflict and energy bills.
Suren Thiru of ICAEW described the slowdown as a “false dawn,” noting higher energy bills may have already reversed it.
Chancellor John Healey said the government cut VAT on electricity bills and will cap bus fares at £2 from January.
The Bank of England’s Monetary Policy Committee is expected to keep interest rates unchanged next week.
Key figures
Martin Sartorius, lead economist at the Confederation of British Industry (CBI)
Suren Thiru, chief economist at the Institute of Chartered Accountants in England and Wales (ICAEW)
John Healey, chancellor
Grant Fitzner, chief economist at the Office for National Statistics (ONS)
George Brown, senior economist at Schroders
Sources: The Guardian
