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UK Inflation Jumps to 2.5% in June

UK Inflation Jumps to 2.5% in June 

British inflation jumped further above the Bank of England’s target in June when it hit 2.5%, its highest since August 2018 and up from 2.1% in May. 

The increase will put the focus of the Bank of England’s plan to keep its huge stimulus programme in place. 

Official data showed higher prices for food, fuel, second-hand cars, clothing, and footwear all pushed inflation up last month as the economy bounced back from its lockdown slump, the Office for National Statistics said. 

The reading was above all forecasts from economists polled by Reuters who mostly had expected consumer price inflation (CPI) to hit 2.2% in the 12 months to June. 

Data published yesterday showed US consumer prices rose by 5.4% in the 12 months to June, the biggest increase in 13 years, and the Federal Reserve has said its top officials were poised to act if inflation risks build. 

Britain’s inflation broke above the Bank of England’s 2% target for the first time in almost two years in May, but its rise is expected to be much less sharp than in the US. 

The Bank of England has said inflation will peak above 3% as Britain before falling back. 

But the central bank’s departing chief economist, Andy Haldane, who took part in his last Monetary Policy Committee meeting in June, has warned of inflation of 4% and the risk that higher price growth sticks. 

In other news, EURUSD has tumbled below 1.18 after high US inflation figures and a soft bond auction. 

Fed Chair Powell’s testimony later today is critical to the next moves. 

Keep an eye on the currency crosses for an opportunity to trade. 

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