Inflation remains at 2%
The Office of National Statistics has released the latest inflation figures for June, and the Consumer Prices Index (CPI) has stayed at 2.0%.
The largest upward contribution to inflation came from restaurants and hotels, where hotel prices have increased on a year ago. It’s thought that Taylor Swift’s Eras tour may have been a significant factor in the increase.
The largest downward contribution came from clothing and footwear as the prices of garments have fallen since a year ago.
As ever following the announcement, attention will now turn to the impact of the announcement on interest rate policy. The Bank of England next meet to discuss this on August 1st.
While it is of course positive that the headline inflation rate has stayed at 2%, there is concern from economists that underlying inflationary pressures, including services inflation, remain and may make a rate cut less likely.
According to Bloomberg, the financial markets reduced the likelihood of a rate cut in August to 25% from 50% after news of the unchanged inflation figures broke.
We will of course keep you posted on any developments around interest rates after the Bank of England’s meeting.
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