UK consumer prices accelerated more-than-expected to a near three-year high in June, data from the Office for National Statistics showed on Wednesday.<\/p>\n
Inflation rose to 2.5 percent in June from 2.1 percent in May. This was the highest inflation since August 2018. <\/p>\n
The rate also remained above the central bank’s 2 percent target and economists’ forecast of 2.2 percent. <\/p>\n
At the June monetary policy meeting, the Bank of England had cautioned that inflation will temporarily exceed 3 percent. But the bank said it is unlikely to tighten monetary policy anytime soon.<\/p>\n
The annual price growth was largely driven by higher prices of food, second-hand cars, clothing and footwear and fuel. These increases were partially offset by a large downward contribution from games, toys and hobbies.<\/p>\n
On a monthly basis, consumer prices gained 0.5 percent, following a 0.6 percent rise in May. The expected rate was 0.2 percent.<\/p>\n
Core inflation, that excludes energy, food, alcoholic beverages and tobacco, advanced to 2.3 percent in June from 2 percent in May.<\/p>\n
Another report from the ONS showed that output price inflation slowed for the first time since May 2020. <\/p>\n
Factory gate inflation eased marginally to 4.3 percent in June from 4.4 percent in May, while economists had forecast the rate to climb to 4.8 percent. <\/p>\n
On month, output price inflation halved to 0.4 percent from 0.8 percent. The expected rate was 0.6 percent.<\/p>\n
At the same time, input price inflation came in at 9.1 percent, down from 10.4 percent a month ago and forecast of 10.8 percent.<\/p>\n
Month-on-month, input prices fell 0.1 percent, in contrast to a 1.2 percent rise in May. Economists had forecast prices to rise again by 1.2 percent. <\/p>\n
Paul Dales, an economist at Capital Economics, said inflation will eventually stick above the 2 percent target. But the economist is not expecting that to happen until 2023 and the bank is unlikely to tighten policy until 2024. <\/p>\n