UK inflation slows in June

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UK inflation slows in June

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Inflation unexpectedly dipped in June in the UK. Consumer prices fell 0.1 percent last month. The annual inflation rate was to 4.2 percent.

Core inflation, which does not include volatile energy and food prices, slowed to 2.8 percent from the previous month’s 3.3 percent.

One reason was retailers offered discounts on a range of electronic goods to try to stimulate sales.

Britain’s Office for National Statistics noted price reductions on computer games, consoles and other electronics, while food prices continued to rise.

Inflation has been above the Bank of England’s 2.0 percent target for the last 18 months years and policy makers expect the annual rate to exceed hit five percent later this year.

Utility companies have recently raised prices for heating and energy.

The figures are likely to bring some reassurance to Bank Governor Mervyn King, who has said repeatedly that the factors behind soaring prices are likely to be temporary, and warned on Monday that attempts to bring inflation down quickly may harm the economy.

The Bank is therefore widely expected to keep interest rates at a record low of 0.5 percent for at least the rest of the year, as concerns are mounting that the economic recovery in the UK is faltering.