Finally, UK inflation comes off the boil
Inflation in the U.K. finally came off the boil in June, bringing relief to consumers, the government — and to the Bank of England.
The consumer price index rose 0.1 percent on the month and was up 7.9 percent from a year earlier, the Office for National Statistics said Wednesday. That was down from a headline rate of 8.7 percent in May and, crucially, the first time in five months the numbers had not exceeded market expectations.
Although falling energy prices contributed most to the improved picture, the slowdown in price increases was broad-based, with the ONS reporting no major gains in prices for specific goods or services. Food prices, which have become the focal point of popular anger at the highest inflation in over 40 years, inched higher, but their annual gain slowed to 17.4 percent from 18.4 percent in May.
The ONS’ measure of core inflation, which strips out volatile food and energy elements, fell more moderately, to 6.9 percent from 7.1 percent in May. However, leading indicators such as factory gate prices pointed to a clear easing of “pipeline” pressures, falling another 0.3 percent, their fourth drop in five months. Producer prices are now only 0.1 percent above last year’s level.
Resolution Foundation Director Torsten Bell said via Twitter that, while the level of U.K. inflation remains above the rest of the G7 and almost all other advanced economies, “this now looks more like a timing effect rather than an entirely different pattern in the U.K.”
