United Kingdom: Inflation moves further above the Bank of England's target in June
July 14, 2021
Consumer prices rose a seasonally-adjusted 0.50% from the previous month in June, moderating from the 0.59% rise seen in May. June's result marked the softest rise in prices since March. The figure was largely due to softer growth in prices for recreation and culture. In addition, prices for restaurants and hotels grew at a more subdued pace.
Inflation came in at 2.5% in June, which was up from May’s 2.1% and above both market expectations of 2.2% and the Bank of England’s 2.0% target. June's figure represented the highest inflation rate since August 2018. Meanwhile, the trend pointed up slightly, with annual average inflation coming in at 1.0% in June (May: 0.8%). Core inflation rose to 2.3% in June, from May’s 2.0%.
Rising inflation in recent months—which has been driven by the reopening of the economy and higher commodity prices—could put pressure on the Bank of England to dial back its monetary stimulus.