UK annual inflation stable at 2.4%: official data

Britain's annual inflation rate held in June at 2.4 percent, the lowest level in 15 months, official data showed Wednesday, denting prospects of a UK interest rate hike next month.

Analysts' expectations had been for inflation's Consumer Prices Index 12-month rate to have risen to 2.6 percent last month.

But inflation was unchanged from May, as falling prices for clothing helped to offset rising energy costs, the Office for National Statistics said in a statement.

Analysts said that the data could lessen the chances of the Bank of England's Monetary Policy Committee (MPC) increasing borrowing costs at its August meeting by a quarter-point to 0.75 percent, as has been widely expected by markets.

“The pound dropped sharply on the (inflation) news, losing around three-quarters of a cent against the dollar as traders revised their bets on an August rate rise,” noted Ben Brettell, senior economist at Hargreaves Lansdown.

“Markets had been pricing in around an 80 percent chance the Bank would lift borrowing costs in August, but today's inflation data combined with yesterday's lacklustre (UK) wage growth figures could force policymakers into a rethink,” he added.

But in a note to clients, Capital Economics' senior UK economist Ruth Gregory said that while Wednesday's inflation numbers “perhaps reduce the chances of a rate hike in August… somewhat counterintuitively, lower inflation might make it easier for the MPC to raise rates as it will relieve the pressure on consumers' incomes”.

(APP)

Posted on: 2018-07-18T16:01:00+05:00

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