UK Inflation Rate Up to 2.9% in June


In June, UK annual inflation rate increased by 2.9 percent, up from 2.7 percent in May. The rise in petrol and clothing prices was partially offset by lower cost of airfares and food prices.

The rate is slightly above the figures seen over the previous 12 months but below the levels reached between the start of 2010 and spring 2012.

Average petrol prices rose by 1.0 pence a litre between May and June this year but they fell by 4.3 pence a litre between the same two months a year ago. Similarly diesel prices rose by 0.9 pence a litre this year but fell by 4.7 pence a year ago.

There was also a large upward contribution from clothing and footwear (+3.1 percent). Prices usually fall between May and June as the summer sales season begins but this year the overall fall was not as steep as in 2012 when there were reports of sales starting earlier than is usual. There were other, comparatively modest, upward contributions from miscellaneous goods and services (particularly personal care products) and housing, water, electricity, gas and other fuels.

The most notable, but relatively modest, downward contributions came from food and non-alcoholic drinks (particularly vegetables), recreation and culture (principally package holidays) and furniture, household equipment and maintenance.

Taking a longer term view, the three main contributors to the 12-month inflation rate in the last five years have been food and non-alcoholic beverages, housing, water, electricity, gas and other fuels and transport (including motor fuels). Combined, these three sectors have, on average, accounted for over half of the 12-month inflation rate each month.

CPIH, the new measure of consumer price inflation including owner occupiers’ housing costs, grew by 2.7 percent in June, up from 2.5 percent in May. The slower growth in CPIH than CPI is due principally to owner occupiers’ housing costs increasing more slowly than overall inflation for other consumer goods and services in the year to June.

UK Inflation Rate Up to 2.9% in June


ONS | Nuno Fontes | nuno@tradingeconomics.com
7/16/2013 10:31:47 AM