Explainer: How the wholesale price inflation rate of 5.77% affects you

Petrol prices are rising

The Office for National Statistics (ONS) said the Consumer Prices Index (CPI) rate of inflation held steady at 2.4% in June as higher motor fuel, gas and electricity prices were offset by deeper discounting by clothing retailers. He told The Guardian: "Inflation had been expected to bounce back up to 2.6% or even 2.7% on the back of higher fuel and energy prices".

Underlying inflation rose by 1.9% on a year-over-year basis, slowing from 2.1% in the previous month and missing forecasts of 2.2%.

The pound weakened as investors pared bets that the Bank of England will raise interest rates next month.

He noted that 10 of the 12 largest energy suppliers - including British Gas, Scottish Power, EDF Energy - have announced price rises which will kick in over the summer.

Mike Hardie, its head of inflation, explained: "Consumers have been feeling the benefit of the summer clothing sales, and computer game prices have also fallen".

That was largely down to the rising price of fuel, with petrol prices hitting their highest in four years in the month.

Screen Shot 2018 07 18
Here’s the chart from the ONS

Wage growth in the United Kingdom is also at the lower end of the scale and with oil price expected to fall as the year unfolds we may not see any rate hike at all from the BOE this year which will hit the pound hard as at least one hike is priced into the currency. Therefore, the core rate of inflation slowed last month, falling below 1 percent for the first time since last March to 1.9 percent.

To be sure, the price gains have to be seen from the perspective of an unfavourable base effect - WPI inflation in June 2017 was just 0.9%. Core inflation was significantly weaker than expected at 1.9% year on year, which will make it more hard for the Bank of England to raise rates, particularly given a backdrop of Brexit and trade uncertainty.

Vegetables - including potatoes - also fell 0.9 per cent month on month.

"Now it looks odds-on that the MPC will hold fire yet again".

"Higher inflation would support that position but an absence of sustained real wage growth as well as ongoing fears about the impact that Brexit will have on the United Kingdom economy means that we could see the "unreliable boyfriend" make an appearance again if Mark Carney and the central bank is forced to make another U-turn come August". That's particularly the case after yesterday's wage growth data emerged weaker than expected at 2.5% including bonuses.

The Retail Prices Index (RPI), a separate measure of inflation, was 3.4% last month, up from 3.3% in May. The month of June also saw a price rise in onions.

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