By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > News > UK inflation falls more than expected to 7.9% in June
News

UK inflation falls more than expected to 7.9% in June

News Room
Last updated: 2023/07/19 at 3:53 AM
By News Room
Share
5 Min Read
SHARE

Receive free UK inflation updates

We’ll send you a myFT Daily Digest email rounding up the latest UK inflation news every morning.

UK inflation eased more than expected to a 15-month low of 7.9 per cent in June, making it more likely that the Bank of England will only raise interest rates by a quarter point next month.

Annual inflation was down from 8.7 per cent in May, the Office for National Statistics said on Wednesday. It was lower than the 8.2 per cent forecast by economists polled by Reuters, ending a four-month period of price growth exceeding forecasts.

It was also in line with the 7.9 per cent forecast by the BoE in May and the lowest since March 2022.

Sterling fell to its lowest in a week, trading 0.6 per cent down against the dollar at $1.2952. 

Core inflation, which strips out volatile food, energy, alcohol and tobacco prices, also declined to 6.9 per cent in June from a 31-year high of 7.1 per cent in the previous month. Analysts expected it to be unchanged.

Services inflation eased to 7.2 per cent in June from 7.4 per cent in May.

Both core and services inflation are closely watched by BoE policymakers to monitor underlying and domestic price pressures and to decide on interest rates.

Markets have shifted to pricing a 60 per cent probability that the BoE will raise interest rates by a quarter of a percentage point to 5.25 per cent at its next meeting on August 3, to bring inflation back to its 2 per cent target. They had been pricing in a better than even chance of a larger half-percentage point increase before Wednesday’s news.

Traders expect BoE interest rates to peak just below 6 per cent early next year, compared with just above 6 per cent prior to the inflation figures.

Economists have also changed their expectations. Paul Dales, economist at Capital Economics, said that the falls in headline and core inflation “are unlikely to be enough to prevent the Bank of England from raising interest rates in early August from 5 per cent, although it may tilt the balance towards a 25 basis points hike rather than 50 basis points”.

Lower inflation is likely to ease the pressure on mortgages after stronger than expected price and wage growth over the previous months had pushed up interest rate expectations and therefore payments for borrowers.

The data will be welcome news for UK prime minister Rishi Sunak, who has pledged to halve inflation this year before a probable 2024 election.

Chancellor of the Exchequer Jeremy Hunt said: “Inflation is falling and stands at its lowest level since last March, but we aren’t complacent and know that high prices are still a huge worry for families and businesses.”

Grant Fitzner, ONS chief economist, said that in June “inflation slowed substantially to its lowest annual rate since March 2022, driven by price drops for motor fuels”.

Led by motor fuel, the price of transport fell by an annual rate of 1.8 per cent last month.

Although it remained at historically high levels, food inflation also eased to 17.3 per cent in June, from 18.3 per cent in the previous month.

ONS data also showed that the annual growth of producer price inputs, such as parts and materials, turned negative in June for the first time since November 2020. The rate has slowed for the 12th consecutive month from its record annual high of 24.4 per cent in June 2022 to minus 2.7 per cent last month.

Despite the larger than expected decline, UK price growth remained higher than in other G7 countries, with economists blaming a combination of surging energy costs and labour shortages.

In June, US inflation slowed to a 27-month low of 3 per cent, while price growth dropped to a 17-month low of 5.5 per cent in the eurozone.

Dales said: “The UK will probably still have higher rates of inflation than elsewhere for a while yet, but at least the UK is now following the global trend.”

Additional reporting by Mary McDougall

Read the full article here

News Room July 19, 2023 July 19, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
How trade tensions are really affecting the global economy

When the UK became the first country to reach a trade agreement…

Hamas gives ‘positive’ response to Trump proposal for Gaza ceasefire

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

US Treasury Secretary Bessent talks tariffs, China, global finance

Watch full video on YouTube

CNBC tests the viral Dubai chocolate bars

Watch full video on YouTube

Valve conquered PC gaming. What comes next?

Here at FT Alphaville we love exploring “black hole” companies: those ultra-private…

- Advertisement -
Ad imageAd image

You Might Also Like

News

How trade tensions are really affecting the global economy

By News Room
News

Hamas gives ‘positive’ response to Trump proposal for Gaza ceasefire

By News Room
News

Valve conquered PC gaming. What comes next?

By News Room
News

BCG modelled plan to ‘relocate’ Palestinians from Gaza

By News Room
News

US threatens EU with 17% tariff on food exports

By News Room
News

Donald Trump and Volodymyr Zelenskyy discuss Ukrainian air defence as Russian attacks mount

By News Room
News

FreightCar America Stock: Strong Demand For Railcars Plus Margin Gains (NASDAQ:RAIL)

By News Room
News

Saudi Arabia sticks with Iran after Israel war

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?