United Kingdom Inflation

United Kingdom

United Kingdom: Inflation moderates in June

July 12, 2011

In June, consumer prices fell 0.1% over the previous month, contrasting the 0.2% increase in May. Most of the downward pressure on inflation came from falling prices in the recreation and culture category (-0.9% mom) due to discounts on some products. As a result, annual headline inflation eased from 4.5% in May to 4.2% in June, which was below market analysts' expectations of a 4.5% increase. That said, the decline in the inflation rate is expected to be temporary, as gas and electricity provider, British Gas, announced that utility bills are to rise by an average of 17% effective 18 August, which is likely to translate into higher inflation readings in August and September. According to its Inflation Report from May, the Bank of England projects inflation to average 4.7% this year and to moderate to 3.0% in 2012.


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