Inflation in the United Kingdom cooled more sharply than economists had anticipated in June, offering an early lift to the country’s new Prime Minister, Andy Burnham, as official figures pointed to softer fuel costs.
The Office for National Statistics reported on Wednesday that the Consumer Prices Index climbed 2.6 per cent in the year to June, down from 2.8 per cent in May. Market analysts had broadly expected a more modest slowdown to 2.7 per cent.
Much of the decline was traced to falling petrol and diesel prices, which eased after crude oil retreated in the aftermath of the ceasefire between the United States and Iran.
The relief, however, may prove temporary. Analysts caution that renewed hostilities in the Middle East this month have unravelled a preliminary peace agreement, sending oil prices climbing again.
Burnham, who assumed office on Monday, has promised to tackle the rising cost of living and used his first full day in charge to announce a cut to energy taxes.
“Falling inflation is news families want to hear, but there is much more to do to give people the breathing space they need,” said the newly appointed Finance Minister, John Healey. He added that the government had deliberately made the cost of living its first priority, “signalling that concern for working people will be at the heart of everything we do.”
The reshuffle at the top followed the resignation last month of Keir Starmer, who stepped down as Prime Minister and Labour leader after sustained internal pressure over a string of scandals, economic missteps and policy reversals.
Not everyone expects the reprieve to last. Paul Dales, chief UK economist at Capital Economics, warned that “higher inflation is still coming,” predicting that the lagged effect of elevated energy prices would likely push the rate above 3.0 per cent by September and towards 3.5 per cent early next year.
Source: Punch.
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