Inflation failed to accelerate as expected in June. An unchanged level of prices on the month left the annual rate steady at May's 2.4 percent, its third consecutive outturn at this mark, comfortably short of the market consensus and equalling its lowest reading since May 2017.
The steady yearly rate masked upward contributions from transport, where prices rose a monthly 0.8 percent after a 0.1 percent increase a year ago, and housing, water, electricity, gas and other fuels (0.2 percent after 0.0 percent). The boost here was essentially offset by the negative effects of clothing and footwear (minus 2.1 percent after minus 1.0 percent) and recreation and culture (minus 0.4 percent after minus 0.1 percent).
As a result, the core index, which dipped 0.1 percent versus mid-quarter, saw its annual change drop from 2.1 percent to 1.9 percent, its first sub-2 percent reading since March 2017. Meantime, the measure preferred by the ONS, the CPIH, was flat on the month and also unchanged on the year (2.3 percent).
The June inflation data should dent speculation about another hike in official interest rates next month. Certainly, it will strengthen the case of the BoE MPC doves as the Bank had forecast a 2.5 percent annual headline rate in its May Quarterly Inflation Report. The hawks will still be worried by the potential longer-term implications of a tight labour market but the August MPC vote is now likely to be a very close affair.