The rate of UK inflation fell from 4.5% in May to 4.2% in June according to latest ONS data. Despite a significant rise in food prices and transport costs. Recreation and culture prices fell to produce an overall slowdown in the headline rate by 30 points. RPI and RPIX inflation indices were up 5% year on year. Goods and service sector inflation were in line with the overall rate at 4.2%.
A closer look at the sectors suggests the inflation watch is not yet over. Food inflation was up by 6.9%, alcohol and tobacco increased by 9.6%, transport costs were up by 7.9% restaurants, hotels and even household goods and services were up by 4.5%.
The biggest impact to the lower rate was the recreation and culture sector. Games, toys and hobbies, computer games, consoles, digital cameras, TVs and other electricals were the main contributors to a lower rate of inflation.
As if three inflation indices were not enough to provide some confusion CPI-Y and CPI-CT also slowed. Only CPI-MK, the Governor’s favored measure of inflation remained constant and on target at 2%.
The views expressed are my own and in no way reflect pro.manchester policy. In no way should the comments be considered as investment advice or guidelines or reflect political bias. UK Economics news and analysis : no politics, no dogma, no polemics, just facts. JKA is a visiting professor at MMU Business School, an economist and specialist in Corporate Strategy, educated at LSE, London Business School with a PhD from Manchester Metropolitan University.