MNI DATA ANALYSIS: UK June CPI Steady; Core At 15-Month Low>

-UK June CPI +2.4% y/y vs +2.4% in May

-UK June Core CPI +1.9% y/y vs +2.1% in May

-UK June Input PPI +10.2% y/y vs +9.6% in May

-UK June CPIH +2.3% y/y vs +2.3% in May

-UK May House Price Index +3.0% y/y, joint-smallest rise since Aug 2013

By Laurie Laird and Jamie Satchithanantham

     London (MNI) - Consumer price inflation steadied in June, 

confounding forecasts of a petrol-fueled increase, as core inflation 

fell to its lowest level in 15 months, potentially delaying a Bank of 

England rate hike.  

     The consumer price index increased by an annual rate of 2.4% last 

month, well below the MNI median forecast of 2.6%, after a 2.4% rise in 

May. 

     The cost of fuel and lubricants jumped by an annual rate of 11.6%, 

extending the 8.0% gain recorded in May, adding 0.11 percentage points 

to the change in annual CPI. Petrol prices hit 128.0 pence per litre 

last month, while diesel rose to 132.1p a litre, the highest since 

September of 2014 for both fuels. 

     But heavy early-summer sales countered much of the upward pressure 

of fuel prices. Clothing and footwear prices slipped by 2.1% between May 

and June, the largest June fall since 2012. That kept annual clothing 

price inflation at a modest rate of 0.1%, subtracting 0.07 percentage 

points from the change in CPI. 

     Falling computer games prices also kept broader inflation in check, 

with the recreation and culture sub-index subtracting 0.04 percentage 

points from the change in annual CPI. 

     Consumer prices registered no change between May and June, after 

rising by 0.4% between April and May, compared to the MNI median of a 

0.2% monthly increase. 

     That takes inflation above the Bank's 2.0% target for the sixteenth 

straight month, but the outturn fell short of Bank of England staff 

forecast of a 2.5% annual rise in June, as reported in the May Quarterly 

Inflation Report. 

     Core inflation continued to ebb, falling to its lowest level since 

March of 2017. Stripping out food and energy, annual core consumer 

inflation slipped to 1.9% in June, below the MNI median of 2.2%, down 

from the 2.1% pace recorded in May. 

     The June inflation report could provoke serious deliberations 

amongst members of the Monetary Policy Committee, due to consider 

interest rates early next month. The lower-than-forecast outturn, 

combined with evidence of sluggish wage growth between March and May, 

could delay a hike in the Bank's base rate. 

     CPIH, which regained its status as a national statistic last year, 

steadied at an annual rate of 2.3% unchanged from May. 

     However, intermediate price inflation accelerated, courtesy of a 

50.7% annual rise in crude oil prices in June. 

     Producer input prices jumped by 0.2% between May and June, for an 

annual gain of 10.2%, the biggest gain since May of 2017, topping the 

MNI median of a 10.0% year-on-year rise, after an 9.6% increase in May. 

     Output PPI increased by 0.1% between May and June, for a 3.1% 

annual gain, the sharpest increase since December of 2017, but below the 

median forecast of a 3.2% yearly increase. A 16.3% jump in the price of 

petroleum products accounted for much of the gain. 

     Retail price inflation accelerated modestly, with RPI rising by an 

annual rate of 3.4% in June, up from a 3.3% pace in May, below the MNI 

median of 3.5% increase. 

     Stripping out mortgage interest payments, RPI-X rose by an annual 

rate of 3.4% in June, matching the May outturn. 

     Meanwhile, UK house price inflation ebbed in May, with the official 

House Price Index rising by an annual rate of 3.0%, below the 

downwardly-revised 3.5% annual pace recorded in February. That's the 

slowest pace of increase since house prices rose by an equivalent amount 

in August of 2013.  

     London housing inflation continued to lag the rest of the country, 

with prices in the capital slipping by 0.4%, the fourth consecutive 

fall, the longest stretch since 2009. 

-London bureau: 44 (0) 203 865 3812; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDS$]