CPI nears Bank of England target
The Consumer Prices Index (CPI) rose to 1.9%, up from 1.5% in May, according to the Office for National Statistics. With women’s clothing prices, air fares and furniture prices being the greatest contributors, the rate is now very close to the Bank of England’s 2% target where it has remained below for the last seven consecutive months.
Inflation is now rising at the fastest rate since January and this news will further fuel expectations that the Bank of England will start raising interest rates sooner rather than later, with November being the most favoured amongst economists for the first rise. We expect the rises to be applied in small increments and unlikely to reach the long term average levels for a long time yet.