Consumer inflation slows again, hinting at possible rate relief

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Consumer inflation slows again, hinting at possible rate relief

However, taking into consideration inflation, real weekly wages fell by 0.5 percent compared with a year previously.

Delving into the details underpinning the numbers, the fall was in large part attributed to the decline in global oil prices.

Another major factor to weigh up is whether the relatively weak pound could put more upward pressure on prices yet, or if this has fully played out now.

Inflation hit an nearly four-year high of 2.9 percent in May, a bigger increase than economists had expected.

'This is going to kill the chances of a rate rise in the short term.

Meanwhile, Spreadex analyst Connor Campbell said: "With the Bank of England split on interest rates, this CPI retreat may shift a few undecided MPC members to the dovish end of the spectrum - after all, if they wouldn't hike at 2.9%, why would they act on 2.6%?"

One of these fivers bought you 2.6 per cent less in June than a year earlier.

Britain's inflation rate has risen sharply since last year's referendum decision to leave the European Union which pushed down the value of the pound, making imports more expensive.

The month on month non-food inflation rate stood at -0,14 percent, shedding 0,15 percent points on the May 2017 rate of 0,01 percent.

The BoE announces its next decision on rates on August 3.

Raising interest rates against the backdrop of falling real incomes would further erode consumer spending power and that is bad news for an economy that relies on consumer spending for three-quarters of its growth.

Inflation had previously risen steadily since March, while it had not fallen since September previous year, but declining oil prices stymied some of the rising price momentum.

This fall of about 11 percent in the sterling's value against the USA dollar led to higher commodity prices and higher costs for imports, sending inflation upwards.

Economists polled by Reuters had forecast a 5.2% year-on-year inflation print.

Core inflation, which strips out volatile energy and food prices, was 2.4 per cent, down from the 2.6 per cent in May and also lower than the City consensus had expected.

"[With sterling] having slid to around $1.26 after the general election, cable has been jacked up in the last month on bets that runaway inflation would force the Bank of England to raise rates sooner than previously thought and despite the risks to the overall economy from premature tightening", he explained.

Statistics NZ reported the consumer price index didn't increase at all in the three months to June, bringing the annual inflation rate down from 2.2 per cent to 1.7 per cent.

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