The UK inflation rate fell in June to its lowest level since November 2009, though it still remains above the Bank of England's target level.
The annual rise in the Consumer Prices Index (CPI) eased to 2.4% in June from 2.8% in May, surprising the economist community, where the consensus forecast was for no change. June's CPI was 0.4% lower than May's.
The Office for National Statistics pointed to sharp falls in the prices of clothing and footwear (-4.2% month-on-month versus the rise expected by some) as contributing factors to the surprise decline. Petrol and diesel prices also headed south. Transport prices decreased by 0.5% month-on-month.
The inflation figure is a far cry from the days of last September, when the Bank of England was chomping at the bit to provide economic stimulus but was reluctant to do so because of the danger of fuelling inflation which, at that time, was running at 5.2%. The Bank of England has been given a remit to keep the annual inflation rate around 2.0%.
The Retail Prices Index also came in lower than expected, with the year-on-year rise easing to 2.8% in June from May's 3.1%; the market had expected an annual increase of 3.0%.
Commenting on today´s data economists at Barclays Research are indicated that, "near-term inflationary pressure is now well below target: the annualised seasonally adjusted 3m/3m inflation rate is about 1.0%, with several components, including clothing and footwear, making big negative contributions..
Today's release suggests that our near-term forecast for annual inflation is likely to be revised downwards, although it should be recalled that the downside news from early discounting in June 2011 was partially unwound in the July outturn. We currently expect CPI inflation to fall back to the 2.0% target by year-end, although we think inflation is likely to rise back above target in H2 13 once the effect of recent oil price declines falls out of the y/y inflation rate."
Datafeed and UK data supplied by NETbuilder and Interactive Data.
While London South East do their best to maintain the high quality of the information displayed on this site,
we cannot be held responsible for any loss due to incorrect information found here. All information is provided free of charge, 'as-is', and you use it at your own risk!
The contents of all 'Chat' messages should not be construed as advice and represent the opinions of the authors, not those of London South East Limited, or its affiliates.
London South East does not authorise or approve this content, and reserves the right to remove items at its discretion.