Inflation remains unchanged at 2% year-to-date as of June
In June, UK inflation stayed steady due to price increases at the Bank of England’s target level for the second month.
The most current official figures show that prices rose 2% in the year leading up to June, the same as in May and partly due to hotel pricing increases.
However, price hikes in services like restaurants and hairdressers persist.
This may prompt Bank of England policymakers to consider lowering interest rates.
Darren Jones, the new Treasury chief secretary, says costs are high for UK families.
We must face the consequences of fourteen years of economic irresponsibility and disruption. Because of this, the current government is making painful choices to fix the foundations so we can rebuild Britain and improve every area.
After being raised to battle inflation, the Bank of England’s base rate, which sets mortgage rates and other borrowing costs, is at 5.25%, a 16-year high. Learn more about the Bank of England here.
For months, the Monetary Policy Committee (MPC), which votes on rates, has kept interest rates at this level. However, many analysts expect them to lower the rate at the August 1 vote!
On Wednesday, the Office of National Statistics (ONS) reported that hotel prices rose significantly in the years running up to June, while used car prices fell, but less than last year.
adjustments were offset by businesses offering broad deals, which lowered garment and footwear prices.
The figure shows that UK CPI inflation will remain at 2.0% in June 2024.
The underlying inflation measures the Bank of England monitors did not alter either.
In the services sector, inflation was 5.7%, while core inflation, which excludes volatile products like energy, was 3.5%. Services core inflation was steady.
Along with other good economic numbers in recent days, it may give the Bank of England committee that sets interest rates next month some food for thought.
On Tuesday, the IMF said the UK may need to keep interest rates “higher for even longer” to cut inflation..
The financial markets expect rate cuts to start on August 1st, lowering fixed mortgage rates.
Considering the latest inflation statistics, the choice appears balanced.
