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UK inflation jumps in biggest monthly increase since 2012

Dan Jones
Written By:
Dan Jones

UK consumer price inflation has moved sharply higher in June, a surprise jump which may strengthen the case for an earlier-than-expected base rate rise.

Inflation rose to 1.9% in June, up from 1.5% in May and fuelled by higher clothing, food & drink and air transport costs, according to the Office for National Statistics. Clothing and footwear costs contributed almost half of the monthly increase.

Economists had expected the index to rise to 1.6% this month, but the 0.4 percentage point rise represents the largest monthly increase since October 2012.

The increase takes CPI inflation back to the level seen this January, though it remains well below the average level of 2.5% seen in 2013 and under the Bank of England’s 2% target.

Sterling rose from $1.707 to above $1.714 following the release of the data, subdued inflation having been one of the factors cited as a reason for the Bank of England not to rush into a base rate rise.