Inflation remains steady at 2% as prices fluctuate
The latest data from the Office for National Statistics has revealed that there has been no change to the rate of inflation, which remained at 2% in June. This steady rate is in line with the target rate set by the Bank of England.
The report highlighted that cheaper clothes from summer sales and less expensive second-hand cars contributed to pushing prices down, while rising hotel prices acted to bring them up. Overall, prices in June rose at the same rate as in May.
Economists had forecast a slight fall to 1.9%, so the unchanged inflation rate may come as a surprise. This news is likely to be unwelcome to the interest-rate setters at the Bank of England, who have been aiming to bring inflation down to 2%.
An interest rate cut would benefit mortgage holders and those paying back other forms of debt like loans or credit card bills. However, the market expectation is uncertain as to whether there will be a cut in August.
Key figures possibly influencing the decision to leave the interest rate unchanged are two other measures of inflation – services and core. The cost of services grew by 5.7%, while core inflation, which excludes fuel and food, stayed at 3.5%.
Darren Jones, chief secretary to the Treasury, commented on the inflation rate, stating that while it is at target, prices remain high for families across Britain. He emphasized the government’s commitment to making tough decisions now to rebuild and improve the country’s economic foundations.
