Annual inflation comes in below expectations as quarterly rate drops to zero

MICHELE MOSSOP  FAIRFAX MEDIA 
 
   Inflation could fall as low as 1.1 per cent next year BNZ believes

MICHELE MOSSOP FAIRFAX MEDIA Inflation could fall as low as 1.1 per cent next year BNZ believes

Britain's inflation rate unexpectedly slipped back in June according to figures released by the Office of National Statistics Wednesday.

Jonanthan Athow, ONS deputy national statistician, said: 'Today's fall in inflation is mainly due to drops in petrol and diesel prices.

Experts predict the unexpected fall in the consumer prices index could lead the Bank of England to shelve an expected increase to interest rates, which would have knock-on consequences for investors and the wider economy. The move will ease the pressure on consumers, who have seen pay squeezed by sluggish wage growth and higher inflation triggered by the Brexit-hit pound.

"If inflation continues to moderate, this could bode well for economic growth - the United Kingdom economy is heavily reliant on the consumer, and economists had expected falling real incomes to eventually translate into lower retail sales", the senior economist added. The fall was driven by the lower cost of petrol, after a significant fall in the oil price from mid-May to mid-June.

"There isn't much evidence of inflation picking up", said Ben Jarman, economist at JP Morgan.

"When you take into account the Bank of England's warning, that any eventual rise in the base rate of interest will be extremely gradual, the short term prospects are not bright". The five-year breakeven rate, a measure of inflation expectations, has fallen 93 basis points since the start of the year and is close to a five-week low.

Most economists had expected the headline rate of CPI to remain roughly the same or at least only shrink to 2.8%, although the number was in line with the Bank of England's latest forecast.

Congress top brass meet to chalk out strategy for monsoon session
Download the News Nation Mobile App and stay connected with top stories from India and around the world. He said opposition parties will seek a discussion on the India-China standoff in Dokalam.

South Africa's inflation rate fell to its lowest in 19 months in June, creating room for the central bank to shift toward looser monetary policy.

International Consolidated Airlines Group lost 1.7 percent and EasyJet fell almost 2 percent after their German peer Lufthansa warned its unit revenue will be lower in the second half of the year.

"Although recently the exchange rate has been relatively stable, the lags involved mean last year's depreciation is still feeding through to higher imported inflation now and over the coming months", said Hill.

"With UK economic conditions softening, it is crucial that the Monetary Policy Committee holds its nerve on interest rates, particularly during this period of heightened political uncertainty".

The UK currency fell by 0.5% against the euro to j1.13.

The fall in the pound lifted the FTSE 100 share index.

The rise in inflation and the consequent squeeze on discretionary incomes have raised fears over the consumer spending which drove resilient GDP growth in the immediate aftermath of the Brexit vote.

Recommended News

  • Could Kirk Cousins wind up with Vikings in 2018?

    Could Kirk Cousins wind up with Vikings in 2018?

    Monday afternoon's deadline came and went without a long-term deal for Kirk Cousins with the Washington Redskins , as expected. Bell , 25, ran for 1,268 yards and seven touchdowns and caught another 75 passes in 12 games for Pittsburgh in 2016.
    15th stage of the Tour de France: Mollema victor  in solitaire

    15th stage of the Tour de France: Mollema victor in solitaire

    On that occasion though, the rider in third place, Samuel Sanchez, was two minutes off the lead. But the French have been [going] so well [with] the stage wins and Bardet fighting for the win.
    Delta Airlines Hits Back: Calls Ann Coulter's Insults 'Unacceptable'

    Delta Airlines Hits Back: Calls Ann Coulter's Insults 'Unacceptable'

    At least one outlet reported that Coulter was asked to move so a female passenger could sit in the same row with her family. The airline also called her tweets "about our other customers and employees" unacceptable and unnecessary.
  • The Prime People Plc (PRP) Increases Dividend to GBX 3.25 Per Share

    The Prime People Plc (PRP) Increases Dividend to GBX 3.25 Per Share

    Old Mutual Customised Solutions (Proprietary) Ltd owns 2,100 shares or 0.02% of their United States portfolio. The stock of WS Atkins PLC (LON:ATK) earned "Overweight" rating by JP Morgan on Wednesday, November 18.

    Apple previews upcoming emoji for World Emoji Day

    Apple didn't indicate when iOS and Mac users might be able to deploy the new emojis , but iOS 11 is due out in September. It has also added mythical characters like a zombie and an elf , which would really add a lot of fun to conversations.
    Billions in student loan debt may be wiped away over missing paperwork

    Billions in student loan debt may be wiped away over missing paperwork

    Those 800,000 private student loans are worth $12 billion, and more than $5 billion of that debt is in default. If it's a loan we're owed fairly, we want to collect.
  • LoC skirmishes intensify: Two army soldiers killed in Pak firing

    LoC skirmishes intensify: Two army soldiers killed in Pak firing

    There has a rise in incidents where Pakistan is targeting the civilians in Poonch and Nowshera sector for some time now. The 24-year-old sepoy hailed from Talwandi in Moga district of Punjab and leaves behind his parents, he said.
    Dangers of artificial sweeteners confirmed

    Dangers of artificial sweeteners confirmed

    It could be by justifying a second helping of dinner because they saved the 165 calories they would have got from a can of Coke. But researchers have now linked them to weight gain and increased risk of diabetes , high blood pressure and heart disease .

    Go behind-the-scenes of Insomniac Games' Spider-Man

    It certainly aims to have a lot of fun with the character, which it does succeed at but there's more than just that. Spider-Man: Homecoming was released this past weekend to great box office numbers and glowing critical reviews.
  • Brexit talks 'get to work' despite United Kingdom  infighting

    Brexit talks 'get to work' despite United Kingdom infighting

    Mr Davis said they made a "good start" at last month's preliminary talks - but it was now time to "get to the nitty-gritty". April 19- The UK exit from the European Union should be complete.
    American Doctor Meets with Charlie Gard's Medical Team

    American Doctor Meets with Charlie Gard's Medical Team

    Hirano is a professor of neurology at Columbia University Medical Center and specializes in rare genetic conditions. The judge ruled that Charlie's mother Connie, from Bedfont, west London, can be present for the examination.
    Police hope sketch brings them closer to killer of teen girls

    Police hope sketch brings them closer to killer of teen girls

    According to our sister station WTHR , Indiana State police will be giving an update on their current investigation. The sketch also depicts a hat, which may not be accurate.

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.