MNI DATA IMPACT: UK CPI Edges Higher In June; Below BOE Target

By Laurie Laird

     LONDON (MNI) - Consumer price inflation edged higher last month, but

remained well below target, paving the way for further accommodation from the

Bank of England following extremely weak GDP data on Tuesday.

     The following are the main points from the June CPI report released on

Wednesday by the Office for National Statistics.

     - Consumer price inflation inched up to an annual rate of 0.6%, slightly

higher than forecast, but still well below the Bank of England's target for an

11th straight month, the longest stretch of of sub-2% price rises since the 11

months ending in January 2017.

     - Clothing and footwear accounted for 0.06 percentage points to the change

in CPI, with the reopening of retailers in June after a long closure

interrupting normal pricing patterns.

     - Some 67 items in the normal CPI basket, representing 16.7% of the basket

by weight, were unavailable in June, down from 74 in May and 98 in April.

Excluding unavailable items, CPI rose by an annual rate of 0.5% in June, up from

0.4% in May, according to the ONS.

     - Continued softness in CPI could remove barriers to further action from

the Bank of England, in the wake of much weaker-than-expected GDP data on

Tuesday.

     - National statisticians acknowledged recent reports from private

economists claiming that official measures of CPI may be understating underlying

inflation rates, and suggested that petrol may have been overweight in the CPI

basket during the lockdown period. The ONS may provide an experimental series to

better reflect pandemic-altered spending patterns from next month.

     - Intermediate inflation remained extremely weak. Input PPI slumped by an

annual rate of 6.4%, the fifth straight annual decline. Output PPI declined by

an annual rate of 0.8%, the third consecutive annual fall.

     - Crude oil prices plunged by an annual rate of 39.6% in June, a more

shallow decline than the 57.4% plunged recorded in May. However, oil prices

surged by 31% between May and June, the largest monthly increase on record.

--MNI London Bureau; tel: +44 203-586-2225; email: les.commons@marketnews.com

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