You are here: Home - Household Bills - News -

Higher petrol prices and air fares drive inflation up to 0.5%

0
Written by:
19/07/2016
UK consumer price inflation rose to 0.5% in June up from 0.3% in May, official figures reveal.

The June rate was slightly higher than expected and just above the position seen for most of 2016, but is still some way off the Bank of England’s official target of 2%.

Rises in petrol prices and air fares were the main drivers for the uptick, according to the Office for National Statistics (ONS).

These upward pressures were partially offset by falls in the price of furniture and furnishings and accommodation services.

However, the data was gathered before the EU referendum, so does not include the effect of sterling’s dramatic fall since the vote, which is set to push up inflation.

Ben Brettell, senior economist at Hargreaves Lansdown, said: “Sterling’s weakness means higher import prices, and this is expected to feed through to significantly higher inflation figures in the coming months. Forecasts suggest it could reach 3-4%.

“However, this will be a temporary factor – assuming sterling remains weak, the effect will fall out of the year-on-year calculation in the second half of next year.”

He added: “Underlying inflationary pressure is hard to see, with Brexit-related economic uncertainty likely to dampen both consumer spending and wage growth in the short term. As such the Bank of England is almost certain to ignore what should be a temporary spike in inflation when it sets monetary policy.

“Most members of the MPC believe interest rates will be cut in August, despite the hawkish Marin Weale indicating yesterday he would not back a reduction at next month’s meeting.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get?

News and updates on everything to do with coronavirus and your personal finances.

Everything you need to know about being furloughed

If you’ve been ‘furloughed’ by your company, here’s what it means…

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

  • RT @NRLAssociation: Coverage in @YourMoneyUK of new research for the NRLA. In an independent poll of tenants, the vast majority said they a…
  • RT @NRLAssociation: Coverage in @YourMoneyUK of new research for the NRLA. In an independent poll of tenants, the vast majority said they a…
  • RT @StepChange: "Our research found an estimated 590,000 people have fallen into rent arrears due to the pandemic... It’s not right that th…

Read previous post:
Why you don’t want a lift from a friend called Lara or Calvin

Drivers named Lara and Calvin are most likely to have points on their driving licence, new research reveals.

Close