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UK inflation unexpectedly eases to 4.2 pct in June

UK inflation unexpectedly eases to 4.2 pct in June

Inflation in Britain unexpectedly fell in June, official figures showed Tuesday, further easing the pressure on the Bank of England to raise interest rates anytime soon.
The Office for National Statistics said that consumer price inflation fell to 4.2 percent in the year to June from 4.5 percent in May.
The statistics office said the fall was largely due to lower prices for recreational products including games, toys and audio visual equipment, that outweighed higher food prices.
The Bank of England has largely justified its decision to keep its main interest rate at the record low of 0.5 percent on the assumption that inflation will likely fall back toward the official 2 percent target next year.
The fall was unexpected _ the consensus in the markets had been that inflation would stay at 4.5 percent.
Analysts said the decline is likely to reinforce expectations that the central bank will keep interest rates low for many months to come, and may even ratchet up the pressure on rate-setters to provide another monetary stimulus.
"With recent data suggesting that the economy is likely to have shown only modest growth at best in the second quarter, the move down in the inflation rate is likely to result in more members of the Monetary Policy Committee arguing that the economy needs a new injection of stimulants to avoid slipping back into recession," said Chris Williamson, chief economist at Markit.
However, analysts warned that inflation may rise further in the coming months, possibly to above 5 percent, as the official measure takes into account higher bills for gas and electricity.
Ross Walker, an analyst at the Royal Bank of Scotland, said the June fall will come as a relief to hard-pressed consumers "not least with gargantuan utility price hikes" due to filter in to the data by the autumn.


Updated : 2021-07-25 04:25 GMT+08:00