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UK inflation unexpectedly rose to 3.6 per cent in June, in a setback for the Bank of England as it seeks evidence that price pressures are cooling alongside slowing economic growth.
Wednesday’s figure from the Office for National Statistics exceeded the prediction of analysts polled by Reuters that inflation would remain at May’s level of 3.4 per cent.
The numbers come as the BoE gauges whether to cut in its key interest rate again as soon as August. In June, the Monetary Policy Committee voted six to three to keep rates unchanged at 4.25 per cent, following a quarter-point cut in May.
The MPC, which has an inflation target of 2 per cent, has reduced interest rates four times since last summer but policymakers remain divided over how persistent prices pressures will prove.
The pound strengthened following the release of the figures, rising 0.2 per cent to $1.340.
Prior to June’s inflation data, traders were betting on at least two more quarter-point cuts from the BoE by the end of the year, according to levels implied by swaps markets.
Core inflation, which excludes energy and food, rose by 3.7 per cent in the 12 months to June, up from 3.5 per cent in May. Services inflation was unchanged at 4.7 per cent, exceeding the 4.6 per cent predicted by economists.
This is a developing story
