UK Inflation Rate Unexpectedly Jumps to 1.9%


The UK annual inflation rate accelerated to 1.9 percent in June of 2014 from 1.5 percent in the previous month. It is the highest rate since January this year, driven by a rise in prices of clothing, food and non-alcoholic drinks and air transport.

The largest upward contributions to the change in the CPI 12-month rate between May and June 2014 came from clothing and footwear: prices, overall, rose by 0.6 percent between May and June this year compared with a fall of 1.9 percent a year ago. Prices usually fall between May and June as the summer sales begin but this year the average prices of a number of products have risen. The main upward effect came from garments, particularly women’s outerwear where there were upward contributions from nearly all items, the largest from trousers and skirts.

Cost of food and non-alcoholic beverages rose between May and June this year but fell between the same two months a year ago. The upward effect came principally from vegetables, bread and cereals, sugar, jam, syrups, chocolate and confectionery and mineral waters, soft drinks and juices.

Transport prices, overall, rose by 0.6 percent between May and June 2014, compared with a rise of 0.1 percent between the same two months a year earlier. The largest upward contribution came from air transport, with average fares rising this year but falling in 2013, particularly on European routes. There was also a smaller upward effect from sea transport. Partially offsetting these movements was a small downward contribution from motor fuels with prices, overall, rising this year by less than a year ago.

Cost of furniture, household equipment and maintenance rose by 0.2 percent between May and June this year but fell by 0.5 percent a year ago. The main upward effect came from furniture and furnishings where prices rose by more than a year ago.

There were no large downward contributions to the change in the CPI 12-month rate between May and June 2014. The only, relatively small, downward effect came from miscellaneous goods and services. This came principally from appliances and products for personal care where there were price reductions on products such as perfume this year. 

On a monthly basis, consumer prices went up 0.2 percent in June. 

UK Inflation Rate Unexpectedly Jumps to 1.9%


ONS | Joana Taborda | joana.taborda@tradingeconomics.com
7/15/2014 10:20:51 AM