UK inflation rises to 1% in June as lockdown eases

UK consumer price inflation unexpectedly rose in July as Covid-19 lockdown measures eased, with clothing and fuel the main contributors.

Consumer price inflation jumped to 1% in July, from 0.6% in June, the Office for National Statistics (ONS) revealed this morning.

Meanwhile, core inflation – which strips out volatile energy, food, alcohol and tobacco prices – rose to 1.8% in July from 1.4% in June.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: “Inflation has risen, in part, due to the largest monthly pump price increase in nearly a decade, as international oil prices rose from their lows earlier this year.”

“The largest upward movement came from clothing where prices fell on the month but by less than a year ago, partly due to different sales patterns throughout the year so far.”

“In addition, prices for private dental treatment, physiotherapy and haircuts have increased with the need for PPE contributing to costs for these businesses.”

The Bank of England said earlier this month that it expects inflation to drop again soon. It could fall to -0.3% in August, the central bank said.

The rise was a surprise to economists, said Neil Birrell, chief investment officer at money manager Premier Miton. “It’s a bit early to call the return of inflation, but it does show that there is activity in the economy,” he said.

The ONS monitors the prices of a selection of goods and services commonly bought by British households. What cost £100 last year should cost £101 today.

As lockdown restrictions have eased, more goods and services that the ONS tracks have become available, it said.

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