Inflation nudges higher but to remain low
Inflation is likely to remain low, economists yesterday predicted, despite it nudging higher last month as the coronavirus crisis halted normal summerdiscountingpatterns.
New figures from the Office for National Statistics (ONS) showed that the annualised rate of consumer price index inflation increased to 0.6 per cent in June, from 0.5 per cent in May. Most forecasts had been for no change in the rate.
Jonathan Athow, deputy national statistician for economic statistics at the ONS, said: “The inflation rate has increased for the first time this year, but remains low by historical standards.
“Due to the impact of the coronavirus, clothing prices have not followed the usual seasonal pattern this year, with the normal falls due to the start of the summer sales failing to materialise.
“Prices for computer games and consoles have risen, but food prices, particularly vegetables, have fallen.”
James Lynch, investment manager, fixed income, at Kames Capital, said June’s slight rise in inflation had surprised forecasters, but said: “Over the next six to 12 months, inflation will most likely remain low and will not be the main driver of policy rates or of the bond market.”
TUC general secretary Frances O’grady said: “It’s no surprise that inflation is low when people are afraid to spend because their job doesn’t feel safe.
“The Chancellor must go all out to push back the rising tide of job losses. Businesses in the hardest-hit sectors need greatergovernmentsupporttostop them going under.”