UK Inflation Rises but Not Enough to Deter Rate Cut

Core inflation that excludes energy, food, alcoholic beverages and tobacco, increased to 1.4% from 1.2% in May

Morningstar News Team 19 July, 2016 | 3:57PM

UK inflation accelerated more than expected on higher air fares and petrol prices in June, up 0.5% on the previous year. Inflation has been below the government-set 2% target since January 2014.

Although the latest inflation data relates to pre-Brexit prices, the 9% drop in sterling post-vote could help push inflation above the Bank of England's target as early as the first quarter of 2017, James Smith at ING, said.

The upside for consumer price inflation will likely be limited by a number of factors, so it is unlikely to go much higher than 3%, IHS Global Insight Economist Howard Archer, said.

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