UK: Inflation Rate rises to 2.5%, exceeds market forecast

Annual inflation rate in the UK increased to 2.5% in June of 2021 from 2.1% in May, above market forecasts of 2.2%.

It is the highest inflation rate since August of 2008, with transport making the biggest upward impact while a low base effect from last year is also weighing.

The monthly rate edged down to 0.5% from 0.6%.

Also, prices for second-hand cars (5.6%), clothing and footwear (3%), eating and drinking out, and motor fuel (20.3%) rose in 2021 but mostly fell in 2020, resulting in the largest upward contributions to the change in the CPI which were partially offset by a large downward contribution from games, toys and hobbies (-0.9%), where prices fell this year but rose a year ago.

Cost of food and non alcoholic beverages was down 0.6%.

The Bank of England predicts inflation will exceed 3% although price pressures should be transitory.

Source: Trading Economics