Commenting on this morning’s latest ONS figures on inflation, Melanie Baker, Senior Economist at Royal London Asset Management said:
“CPI remains a very long way above the Bank of England’s 2% target, and is stronger than the BoE staff projection for June CPI from May’s Monetary Policy Report (9.1%Y). With core inflation again lower, you might argue that there is less domestically driven inflation this month. However, given the drivers of the down-move, that is hard to argue. Services inflation - which should be more domestically driven, also rose.
“In the meantime, these high rates of inflation continue to run faster than pay growth and the financial situation of many households will still be worsening. High inflation on one side, especially in essentials like food and energy, then central bank rate hikes on the other, and another rate rise still looks likely in August, which means the outlook for the consumer remains challenging.”
The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.