UK inflation rate remains unchanged at 2% in June – what it means for your money
THE UK’s rate of inflation remained unchanged in June, according to fresh figures from the Office for National Statistics (ONS).
Consumer Prices Index (CPI) inflation stood at 2% last month, the ONS revealed.
It comes after inflation hit the Bank of England’s 2% target level for the rest time in more than three years in May.
Inflation is a measure of how much the prices of everyday goods such as food and clothes, and services such as train tickets and haircuts, have increased compared to a year earlier.
It’s important to note when inflation falls that doesn’t mean prices have stopped rising, they are just increasing at a slower pace.
While some experts had predicted that inflation would fall below 2% for the first time since April 2021, other expected to see an increase driven by Taylor Swift’s stadium tour in UK cities last month.
Dean Butler, managing director for retail direct at Standard Life, said: “Despite speculation around the potential impact of Swiftonomics – Taylor Swift’s UK tour driving up live music and hospitality prices in June, and raising the headline figure – inflation has stayed at the BoE’s 2% target.
“This will fuel ongoing speculation that we’ll see an interest rate cut as early as August.”
The BoE will be watching today’s figures closely as it decides whether to lower its base rate next month.
It offers hope to mortgage holders and prospective buyers that interest rates could come down sooner rather than later.
Interest rates current sit at a 16-year high of 5.25%.
Ben Thompson, Deputy chief executive at the Mortgage Advice Bureau, said: T”his firmly opens the door for an August rate cut – the first since 2020.
“This is good news for buyers, but it’s important to remember that rates won’t fall off a cliff come August.
“Lenders have already priced in a cut for this summer, so now is the perfect time to get mortgage ready, speak to a broker, and see what your options are.”
Darren Jones, chief secretary to the Treasury, added: “It is welcome that inflation is at target, but we know that for families across Britain prices remain high.
“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.”
What it means for your money
Because inflation is a measure of how much the price of a basket of goods is rising, if it slows it’s good news for your pocket.
However, even if inflation is slowing, it still means prices are rising, just at a slower pace.
It means consumers shouldn’t see today’s news as a signal to splash the cash, however.
Matt Hartley, director of engagement at the Money Advice Trust, the charity that runs National Debtline, said: “Millions of people are still struggling, despite lower inflation, as the fallout from the cost of living crisis continues to impact household budgets.
“The new Government needs to prioritise support for households in difficulty, including helping people with unmanageable energy debts through a Help to Repay scheme, and improving the support offered by Universal Credit. .
“I’d urge anyone worried about their bills to seek free, independent debt advice from National Debtline. No one needs to struggle alone.”
And whether inflation will stay at the 2% rate for the foreseeable future is yet to be seen too.
In anticipation of a possible reduction to the Bank of England base rate, experts have urged mortgage holders to think about their options.
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