Interest price minimize hopes in steadiness after inflation holds at 2% in June
Fears were raised that Taylor Swift has dashed hopes of an early interest rate today after inflation stuck at 2 per cent last month.
The headline CPI was unchanged from May, and bang on the Bank of England‘s target level.
However, analysts had pencilled in a marginal fall, and price rises in the services sector remained stubbornly high at 5.7 per cent.
Experts pointed out that the biggest upward pressure came from restaurants and hotels, with the ‘global phenomenon’ pop star touring in the UK during the month.
They warned there is now no guarantee that Threadneedle Street will start to bring down the base rate when the Monetary Policy Committee (MPC) meets on August 1.
The Pound also edged up slightly on the news, as markets gambled that the first cut could be delayed.
Experts pointed out that the biggest upward pressure came from restaurants and hotels, with the ‘global phenomenon’ Taylor Swift touring in the UK during the month (pictured at Wembley on June 22)
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The latest ONS figures showed that prices in restaurants and hotels rose more than a year ago, putting upward pressure on the headline inflation rate.
But prices of clothing and footwear fell last month, which helped bring down the overall rate.
Services CPI inflation – which looks only at categories like hospitality and culture and is watched closely by the Bank’s rate-setters – was unchanged at 5.7 per cent.
Many economists had been expecting the rate to slow last month.
ONS chief executive Grant Fitzner said: ‘The inflation rate was unchanged in June. Hotel prices rose strongly, while second-hand car costs fell but by less than this time last year.
‘However, these were offset by falling clothing prices, with widespread sales driving down their cost.
‘Meanwhile, the cost of both raw materials and goods leaving factories fell on the month, though factory gate prices remain above where they were a year ago.’
Isaac Stell, Investment Manager at the Wealth Club said: ‘Inflation in June was slightly ahead of expectations, but remains at the Bank of England’s target.
‘The largest upward impact came from Restaurants and Hotels in a month where Taylor Swift has been touring the UK.
‘The Swift effect remains a global phenomenon, and could well find its way into future economic textbooks.’
Darren Jones, chief secretary to the Treasury, said: ‘It is welcome that inflation is at target, but we know that for families across Britain prices remain high.
‘We face the legacy of 14 years of chaos and economic irresponsibility.
‘That is why this Government is taking the tough decisions now to fix the foundations so we can rebuild Britain and make every part of Britain better off.’
