Business
The UK inflation rate fell unexpectedly in June, with the Consumer Prices Index (CPI) measure dropping to 4.2%.Markets had expected the figure to hold steady again at 4.5%.
The Retail Prices Index (RPI) measure of inflation – which includes mortgage interest payments – also fell, from 5.2% to 5%, according to the Office for National Statistics.The slowdown came courtesy of falling prices for games, toys and hobbies, as well as for clothing and footwear.
Clothing prices fell 1.9% compared with the previous month, led by falling prices for women’s outerwear and footwear, as summer sales began early, the ONS said.”Seemingly the ONS is picking up more aggressive discounting in some of the more discretionary spending areas,” said Ross Walker, economist at RBS Financial Markets.
The price data echoes poor retail sales revealed earlier on Tuesday by the British Retail Consortium, which suggested that shops which had cut prices aggressively had seen a small recovery in volumes.The ONS also said that the cost of audio-visual equipment also eased, thanks to discounting on some products.
Meanwhile, food costs continued to rise sharply, jumping 0.9% in the month, with notable increases in the cost of bread, cereals, meat, milk, cheese and eggs.