UK inflation eases to 4.2% in June

| July 12, 2011 | 0 Comments

The Office for National Statistics (ONS) today announced Consumer Price Inflation (CPI) unexpected fell to annual rate of 4.2% last month from May’s 2½-year high of 4.5%.

Analysts had expected the figure to remain at 4.5%.

However, the figure remains more than double the target of 2% and has been above this level since December 2009 and is expected to remain above target during 2012.

The Bank of England has previously warned that inflation could reach 5% later this year, driven higher by rising energy costs.

Meanwhile, last week, the Bank of England’s Monetary Policy Committee (MPC) opted to keep interest rates at the historic low of 0.5% despite rising inflation.

However, in its influential Quarterly Bulletin, the Bank said interest rates can be held at the record low in order to prevent economic growth from stalling.

Meanwhile, Retail Price Inflation (RPI), which includes mortgage costs and is used as the basis for many wage deals, also fell to 5% from 5.2% in May, said the ONS.

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