GBP Falls After UK Inflation Comes in Below Expectations

Croatia's annual inflation slows in June

Consumer price inflation stagnated in the second quarter and annual inflation slowed sharply from multi-year highs seen in the first three months of the year, according to official data on Tuesday.

Spreadex Analyst, Connor Campbell added "Analysts are expecting the CPI reading to have remained at 2.9% in June; however, the figure has outperformed estimates for the last 4 months in a row, suggesting we could get another surprise this morning".

Inflation unexpectedly slowed last month, knocking back the chances of an interest rate hike and easing the pressure on household finances.

British consumers have been feeling the squeeze from rising prices since June's Brexit vote caused a sharp fall in the pound.

'Falling oil prices are one of the key factors driving this reduction, bringing down the cost of petrol and diesel for motorists'.

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Adrian Lowcock, investment director at Architas, adds: "The main drivers of inflation over the previous year have been due to one off events largely outside of the control of the Bank of England".

'The main drivers of inflation over the a year ago have been due to one off events largely outside of the control of the Bank of England.

"Although the Bank of England has adopted a hawkish tone in recent weeks, today's fall in inflation is likely to ease pressure on the Bank of England taking action, consequently keeping hawks at bay".

"The UK economy is heavily reliant on the consumer, and economists had expected falling real incomes to eventually translate into lower retail sales".

The ONS said inflation was pushed down by fuel prices after a fall in global oil prices and a partial recovery in the value of the pound last month.

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"Despite the fall in the inflation rate, real wage growth is still in negative territory", Conor Lambe, economist at Danske Bank, said.

The core inflation rate, which excludes the most volatile products such as petrol, food and alcohol, also saw a visible annual drop, from May's 2.6% to 2.4% in June.

Carney has said a rate hike would probably be needed if the economy overcomes its slowdown of earlier this year and wages - which are lagging behind inflation - grow more strongly.

Schultz said at least two members of the Monetary Policy Committee could vote in favour of a 25-basis-point cut next tomorrow.

United Kingdom inflation registered a shock fall last month, sliding to 2.6%, well below the 2.9% recorded in the month before and economist expectations of no change.

European Union officials seek sense of urgency as Brexit bargaining begins
The prime minister may have to seek consensus from other parties in parliament and to offer concessions on relative policies. For now, the EU says May's offer to guarantee the rights of 3 million Europeans in Britain falls short.

"Inflation remains a major risk to the UK's growth prospects this year, with rising cost pressures for consumers and businesses likely to dampen overall economic activity".

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