British inflation rises higher than expected in June

British inflation accelerated higher than forecast in June, matching one of the highest levels seen over the last 18 months, influenced by a surge in airfares.

Consumer prices rose to 0.5% year-on-year in June, higher than the 0.3% rise seen in May. Core inflation, except for energy, food, alcoholic beverages and tobacco, climbed to 1.4% from 1.2% in May.

Consumer prices, which are set to pick up speed soon after last month’s vote to leave the European Union, rose 0.5% compared with a year ago, the Office for National Statistics (ONS) said. Economists had expected a 0.4% annual rise [1].

The ONS said prices had risen by 0.2% between May and June this year, but had remained unchanged over the same period of 2015. It collected the sample of the cost of around 700 goods and services before the EU referendum on 23 June [2].

The inflation rate is still well below the Bank of England’s target of 2%; last year it was zero, the lowest rate since 1950. According to economists, the pound’s drop since Britain’s decision to leave the EU is likely to push inflation higher. Last week, the central bank pledged to prepare stimulus for August in an effort to help with the immediate effects of Brexit.

[1] CNBC UK inflation rises more than expected in June, boosted by airfares CNBC.COM
[2] Guardian Higher travel costs push up UK inflation