The Consumer Prices Index (CPI) of the United Kingdom increased by 2% in the 12 months to June, according to data released by the Office for National Statistics (ONS) on Wednesday. This rate was unchanged from May and remained in line with the Bank of England’s 2% target.
“Hotel prices rose strongly while second-hand car costs fell but by less than this time last year. However, these were offset by falling clothing prices, with widespread sales driving down their cost,” said Grant Fitzner, chief economist of the ONS.
The ONS reported that core CPI, which excludes volatile items such as energy, food, alcohol, and tobacco, rose by 3.5% over the same period, maintaining the same rate as in May. Similarly, the annual rate of CPI services also held steady at 5.7%. Both of these rates are key metrics closely watched by the Bank of England.
“Although headline inflation remaining at the target level is good news, underlying inflationary pressures remain high,” commented the National Institute of Economic and Social Research (NIESR).
Monica George Michail, associate economist at the NIESR, noted that the persistently high rates in core CPI and CPI services are likely to make the Bank of England cautious about implementing interest rate cuts in the near future.
