Inflation hits 2.9% in June as price pressures continue
The rise, while below economists’ expectations of a rise to 3%, continues a gradual creep higher in the inflation rate seen in recent months.
But the number means new Bank of England governor Mark Carney (pictured) will be spared having to write to the Chancellor explaining why inflation is one percentage point above its target 2% level.
Core CPI inflation, meanwhile, rose slightly from 2.2% to 2.3% on the month. But economists expect price pressures will start to subside from here.
“Looking ahead, it seems likely that June’s inflation figure will represent this year’s peak. Indeed, with leading indicators pointing to a fall in core inflation in the second half of this year, we think that CPI inflation is likely to fall back to the 2% target by the end of the year,” said Capital Economics’ UK economist Samuel Tombs.
“Accordingly, there is nothing in the inflation outlook to dissuade the [Monetary Policy Committee] from pressing ahead with more formal ‘forward guidance’ at next month’s crucial MPC meeting.”
Next month will also see the Bank will issue its quarterly inflation report, containing details of its recommendations over the prospect of ‘forward guidance’.
Tomorrow will see the publication of minutes from Carney’s first MPC meeting as governor, which took place at the start of July.