–Jun CPI -0.1% m/m; +4.2% y/y vs May +4.5% y/y; below median
–Jun core CPI -0.2% m/m; +2.8% y/y vs May +3.3% y/y; below median
–Jun RPI unch. m/m; +5.0% y/y; Jun RPIX unch. m/m; +5.0% y/y
LONDON (MNI) – Consumer prices fell on the month in June for the
first time in 8 years, as the price of games, toys and hobbies declined,
figures released by National Statistics revealed Tuesday.
The surprise fall in prices in June means inflation for the second
quarter of the year came in below the Bank of England’s latest forecast,
easing pressure on the central bank to tighten policy to curb rising
inflationary pressures.
The consumer prices index fell 0.1% on the month in June, causing
inflation to ease to 4.2% from 4.5% in May. This was the first
monthly fall in prices for a June since 2003.
The outturn was significantly below the median forecast
from City analysts which had been for a rise of 0.2% on the
month and 4.5% on the year.
Between May and June the fall in prices was led by a 0.9% monthly
drop in recreation and culture, with the largest downward impact from
games, toys and hobbies as well as other electronic equipment and books.
There was also a sharp fall in clothing and footwear prices as
retailers discounted heavily to attract customers as some summer sales
began. Prices were down 1.9% on the month.
The only major upward impact came from food and non-alcoholic
beverages where prices were up 0.9% on the month with widespread
increases across a range of foods.
Core CPI inflation, a much watched gauge of underlying inflationary
pressures, fell back to 2.8% on the year in June from 3.3% in May, the
lowest since November 2010.
In the May Inflation Report, the Bank of England forecast inflation
to stand at 4.5% in Q2 and today’s report showed it coming in just below
at 4.4%. Over recent years the BOE has consistently under-estimated the
strength of inflationary pressures.
The Retail Prices Index, which used to be the key index for gauging
inflationary pressure in the economy, was unchanged on the month and
up 5% on the year, below the median forecast of 5.2%.
Excluding mortgage interest payments, RPIX was also unchanged
on the month and up 5%, below the median forecast of 5.3%.
–London bureau: 0044 20 7862 7491; email: drobinson@marketnews.com
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