UK consumer price inflation eases more than expected

by | Jul 19, 2023

(Sharecast News) – UK consumer price inflation fell more than expected in June, according to figures released on Wednesday by the Office for National Statistics, easing pressure on the Bank of England to keep hiking rates.
CPI fell to 7.9% in the year to June from 8.7% in May. This was the lowest reading since March 2022 and below analysts’ expectations of 8.2%.

Meanwhile, core inflation – which excludes energy, food, alcohol and tobacco – fell to 6.9% from 7.1%, versus expectations for it to remain unchanged.

Capital Economics said the falls in the CPI inflation rate and core inflation “are unlikely to be enough to prevent the Bank of England from raising interest rates in early August from 5.00%, although it may tilt the balance towards a 25bps hike rather than 50bps”.

“Even so, we think there is enough momentum in wage growth and services inflation to raise our forecast for the peak in Bank Rate from 5.25% to 5.50%,” said chief UK economist Paul Dales.

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