Inflation ticked up for the first time in six months in June, reaching 0.6 per cent and driven by the rising price of games and clothing.
Official data from the Office for National Statistics, published today (July 15), showed the Consumer Prices Index had picked up from May’s four-year low of 0.5 per cent as lockdown began to ease.
Falling prices of food, alcohol, tobacco and restaurants and hotels stalled further growth over the month, the figures show, and the rate is still well below the Bank of England’s 2 per cent target.
Inflation has dropped from 1.8 per cent in January as the coronavirus crisis shut down shops, pubs, restaurants and hotels and stifled consumer spending.
Yesterday, official data showed the UK economy shrank by nearly a fifth during lockdown despite returning to growth in May.
Inflation is one of the main factors that the BoE's Monetary Policy Committee considers when setting the interest rate.
The BoE is unlikely to raise interest rates at times of low inflation as it aims to grow the economy and get consumers to spend more.
Jonathan Athow, deputy national statistician at the ONS, said: "The inflation rate has increased for the first time this year, but remains low by historical standards."
Laura Suter, personal finance analyst at AJ Bell, said June’s increase did not necessarily mean inflation would rise skywards over the rest of the year.
She said: “Everyone from the Bank of England to the Office for Budget Responsibility expects inflation to fall further this year, before rebounding slightly next year.”
Chief UK economist at Pantheon Macroeconomics, Samuel Tombs, said the small rise in CPI was “nothing to worry about”, claiming the data would not stand in the way of the central bank “doing more to stimulate the economy” later this year.
imogen.tew@ft.com
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