The Office of National Statistics has released the latest inflation figures for June, and the good news is that the Consumer Prices Index (CPI) has stayed at 2.0%.
The largest upward contribution to inflation came from restaurants and hotels, where hotel prices in particular have increased on a year ago. Taylor Swift’s Eras tour in the UK may have been a factor in this.
The largest downward contribution came from clothing and footwear as the prices of garments have fallen since a year ago.
As ever, attention turns to how this may affect interest rate policy. The Bank of England next meet to discuss this on August 1st.
While it is encouraging that the headline inflation rate has stayed at 2%, there is concern from economists that underlying inflationary pressures, including services inflation, still persist that make a rate cut less likely. According to Bloomberg, the financial markets reduced the likelihood of a rate cut in August to 25% from 50% after news of the unchanged inflation figures broke.
Anecdotally, we are noticing that many clients in the services sector remain under pressure with finding new work, with some of their regular customers looking at ways to cut costs and reduce spend as well. Collecting payments is also an issue for some.
For more info, see: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/latest