UK inflation accelerated in June 2016

UK inflation accelerated in June 2016, as consumer prices rose by 0.5% yoy against 0.3% growth in May. The market expectations were for 0.4% inflation. The value in June was slightly above the average for the year, but is still relatively low for historical standards specified by the Statistical Office. The main driver of inflation are growing airline tickets, transport fuels and the goods and services in the field of entertainment. The main inflationary pressures were partially offset by a decline in prices of furniture and many household goods.

The core inflation, which excludes volatile prices of food and fuel, accelerated to 1.4%, which was also above expectations for growth of 1.3%. This measure was moving around a similar amount this year, which suggests that inflation probably need stimulus to reach the target level of central bank set at 2%.

“The cost of flights jumped by a record 10.9% between May and June”, said National Statistics Office. “The growing cost of oil, feeding through to petrol prices, also helped to nudge up CPI. Inflation should rise sharply in the coming months as the fall in the pound relative to other currencies following the Brexit vote makes goods imported into the UK more expensive”, adds the statement.

Seoarate study of the Statistical Office showed that prices rose by 8% yoy in May, slower than 8.2% growth in April.

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