UK Inflation Slowed in June

U.K. inflation slowed less than economists forecast in June as higher costs of goods from fuel to food kept the rate of price increases above the government’s 3 percent limit.

Consumer prices rose 3.2 percent from a year earlier, compared with 3.4 percent in May, the Office for National Statistics said. On the month, consumer prices rose 0.1 percent.

The persistence of inflation may bolster the case of Bank of England policy maker Andrew Sentance, who made the first push to raise the interest rate in almost two years in June. Officials this month kept up emergency stimulus and held the benchmark at a record low to aid the recovery during the deepest public spending cuts in half a century.

The gain in the inflation rate was led by transport because of higher fuel and lubricant costs, and restaurants and hotels, the statistics office said. All categories of prices increased apart from clothing and footwear, which was discounted during seasonal sales.

Core inflation, which excludes the cost of food, tobacco, alcohol and energy prices, accelerated to 3.1 percent from 2.9 percent in May, the statistics office said. The result matched the highest since records began in 1997.

Retail price inflation, a measure of living costs used in wage negotiations, slowed to 5 percent in June from 5.1 percent the previous month, the statistics office said. Excluding mortgage-interest payments it was 5 percent, down from 5.1 percent.

UK Inflation Slowed in June, Bloomberg
7/13/2010 9:40:54 AM