Food price rises drive UK inflation to highest point in 3 years

Food price rises drive UK inflation higher in June
// The CPI rose to 2.5% in June from a figure of 2.1% in May
// This is still above the Bank of England’s 2% target & analyst forecasts of 2.2% for the month
// It is also the highest inflation rate since the UK saw a 2.7% rise in August 2018

The UK’s rate of inflation soared to its highest point for almost three years in June on the back of increases in the prices of food and fuel.

The ONS said the Consumer Prices Index (CPI) rose to 2.5 per cent from a figure of 2.1 per cent the previous month, moving further away from the Bank of England’s two per cent target.

The official figure again overshot the expectations of analysts, who had predicted that it would rise to 2.2 per cent for the month.

READ MORE: Shop prices slide further in June

It is also the highest inflation rate since the UK saw a 2.7 per cent rise in August 2018.

The Bank of England has warned that inflation could hit three per cent by the end of the year.

“Inflation rose for the fourth consecutive month to its highest rate for almost three years,” ONS deputy national statistician for economic statistic Jonathan Athow said.

“The rise was widespread – for example, coming from price increases for food and for second-hand cars where there are reports of increased demand.

“Some of the increase is from temporary effects – for example, rising fuel prices, which continue to increase inflation, but much of this is due to prices recovering from lows earlier in the pandemic.

“An increase in prices for clothing and footwear, compared with the normal seasonal pattern of summer sales, also added to the upward pressure this month.”

The ONS said food and non-alcoholic drinks contributed to the lift in inflation, after a 0.2 per cent price rise for the month compared with significant deflation for the same period last year.

Within food, the largest shift was caused by bread and cereal prices, where prices of items such as packs of individual cakes and crumpets rose this year but fell a year ago.

Meanwhile, the price of petrol increased by 2.5p between May and June, rising to its highest price since October 2018.

Elsewhere, a rise in second-hand car prices also contributed to inflation, with reports that prices were buoyed by higher demand at the end of the latest lockdown.

The Retail Price Index (RPI), a separate measure of inflation, increased to 3.9 per cent – the highest since January 2018.

The CPI, including owner-occupiers’ housing costs (CPIH) – the ONS’s preferred measure of inflation – was 2.4 per cent for the month, compared with 2.1 per cent in May.

with PA Wires

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