WPI inflation falls 1.81% in June, but food prices rise

Darnell Taylor
July 15, 2020

Food inflation in June increased by 7.87 per cent, according to Consumer Price Index (CPI) data.

Consumer price inflation increased to 0.6% in June from 0.5% in May, the Office for National Statistics said.

The government had suspended the release of CPI inflation headline numbers for April and May due to insufficient data during the lockdown period.

The ministry also released the WPI for April at -1.57% and said: "indices for April are finalized in the light of improved response rate from the selected sources". Vegetable inflation stood at 1.86%, while inflation in the fruits category stood at -0.68%.

"As the various pandemic related restrictions were gradually lifted and non-essential activities started resuming operations, NSO collected prices from 1030 urban markets and 998 villages, for commodities that were available and transacted during the month of June, 2020". On a month-on-month basis core inflation was at -0.2% from the same rate previously.

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Annual retail inflation rose to 6.09% in June, compared to 5.84% in March, and 5.30% forecast in a Reuters poll of economists.

"In our view, the MPC will choose to frontload its assessment of the space for further rate cuts, in a bid to support sentiment and hasten transmission amid the substantial surplus in systemic liquidity, although the decision is unlikely to be unanimous".

United Kingdom inflation has risen for the first time this year, fuelled by the rising price of games consoles during lockdown and a lack of summer sales on the high street. The inflation number is still above the RBI's upper band.

Economists have said inflation running well below the Bank of England's 2% target leaves the central bank under no pressure to rethink its huge stimulus push to help Britain's economy through the coronavirus crisis. Economists had expected the rate to remain unchanged at 1.2%.

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