UK Inflation at 15-Month Low in Temporary Relief for Consumers

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Or sign-in if you have an account.e(42]lo4afxy12u7k4ueu27z_media_dl_1.png Office for National Statistics(Bloomberg) — UK inflation fell to its lowest level in over a year on cheaper motor fuel and food, a reprieve for households that may prove short-lived as a return to hostilities in the Middle East pushes up energy prices.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountConsumer prices rose 2.6% in the 12 months to June, an easing from the 2.8% increase the previous month and the lowest rate since March last year, the Office for National Statistics said on Wednesday. It was below the 2.7% economists were expecting on average, the third month in a row price growth has undershot forecasts. Petrol and diesel costs fell 3.1% last month after crude oil tumbled amid hopes of an end to the US-Iran war. Other downward pressures came from food inflation easing to its lowest since 2024 and heavy clothing discounts. Services inflation — a sign of domestic pressures being watched closely by the Bank of England — slowed to 3.6% from 3.7%, slightly higher than forecast.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againHowever, the respite for consumers from falling inflation may be brief. Yael Selfin, chief economist at KPMG UK, said June is “likely to mark the low point for inflation this year, with higher energy bills set to complicate the short-term outlook.”Economists expect inflation to tick up in July when Britons were hit by a 13% increase in the price cap that sets household energy bills. With hostilities between the US and Iran escalating once again, crude oil is back above $90 a barrel and gas prices have risen sharply in recent weeks.Living costs are a top priority of the new Labour administration with Prime Minister Andy Burnham promising to provide families “breathing space.” In one of his first acts as premier, he announced the removal of value-added tax on household electricity bills from October, support the government estimates will reduce inflation by around 0.1 percentage points.Still, inflation is running well below the levels the BOE had feared in the early months of the Middle East conflict. Weekly government data shows UK petrol prices have eased to around 152 pence per liter, 4% below the peak in late May.The BOE is widely expected to keep interest rates on hold next week as it tries to balance the threat from higher energy prices against a weak labor market and sluggish economic growth. It will provide a new set of full forecasts alongside the decision on July 30, with markets currently pricing in one rate increase this year and a 60% chance of a second.“Even with energy inflation picking up, this is not an environment in which the BOE should be raising rates,” said Zara Nokes, global market analyst at JP Morgan Asset Management. “Further tightening would also risk unnecessarily weighing on activity at a time when domestic policy uncertainty is high.”This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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