Pound slumps on inflation figures

ONS releases inflation figures for June

ONS releases inflation figures for June

The data from the Office for National Statistics showed that clothing and footwear prices fell by 2.1 percent between May and June, the biggest decline for the month since 2012.

Analysts said that the data could lessen the chances of the Bank of England's Monetary Policy Committee (MPC) increasing borrowing costs at its August meeting by a quarter-point to 0.75 per cent, as has been widely expected by markets.

The cost of fuel rose to its highest level in nearly four years last month and held up the rate of inflation in the United Kingdom, according to the Office for National Statistics. There was also downward pressure from computer games, toys and hobbies.

Core inflation was significantly weaker than expected at 1.9 per cent year-on-year, which will make it more hard for the Bank of England to raise rates, particularly given a backdrop of Brexit and trade uncertainty.

Sterling hit four-month lows against the euro, with EUR/GBP hitting a high of 0.8923, before pulling back slightly to trade at 0.8912.

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Upward pressure also came from electricity and gas prices after suppliers including British Gas, EDF and Scottish Power increased their tariffs in response to higher wholesales costs. The expected increase was 0.4 percent.

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There have been some signs of recovery which could encourage the BoE to raise interest rates in August, to counter the high levels of Inflation that have been seen since the Brexit vote.

Britain´s economy appears to be picking up after a slow first three months of the year, when unusually heavy snow hurt demand, and the central bank worries it is bumping up against the speed limit that would start to push up inflation.

"Now it looks odds-on that the MPC will hold fire yet again".

'August's expected rate hike is, therefore, even less of a dead cert than it was before today's surprise inflation print.

The U.S. dollar index, which measures the greenback's strength against a basket of six major currencies, was up 0.34% to 95.04, within close reach of the eleven-month high of 95.25 reached in late June.

Separate figures showed producer input prices rose 10.2 percent in June from a year earlier, driven by oil. However, this was partially offset by the buoyant property market in the Midlands'.

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