Inflation remained at 2.4% in June…
…Economists had been expecting an increase to around the 2.6% mark given rising energy costs.
But rising energy costs were offset by lower summer clothing and computer game prices in June…
…As a result core inflation was down.
And importantly the Sterling depreciation effect is fading…
…This was broadly responsible for the increase in prices over the last year.
And domestic costs pressures (pay) also look to be losing some momentum…
Whole economy regular earnings was down from 2.8% to 2.7% in May.
Nevertheless higher energy prices are keeping inflation above target, and raising manufacturers input costs at the same time…
…This is likely to be putting pressure on margins
So what does this mean for the MPC?
Today’s release (as well as yesterday’s earnings data) has potentially giving the Bank of England pause for thought ahead of the widely expected interest rate rise next month.
Prices had been expected to come in higher given rising energy costs…making the case for a rate rise that bit easier to warrant.
However with inflation remaining stable, the sterling depreciation effect continuing to fade, and wage data also losing momentum, this may swing some MPC members who are umming and ahhring about which way to vote come the 2nd August.