London (dpa-AFX) – In Great Britain, the upward trend in prices weakened significantly in June. Compared to the same month last year, London’s statistics office, the ONS, reported a 7.9 percent increase. It was 8.7 percent in the previous month. On average, analysts expect a somewhat modest slowdown of 8.2 percent.
The pound sterling reacted to weaker inflation with losses against the US dollar and the euro. The backdrop is the Bank of England’s expected monetary policy: further interest rate hikes are expected due to higher inflation. However, if inflation falls faster than expected, this could reduce their willingness to raise interest rates further. Higher interest rates push up the currency – and vice versa.
Statisticians attributed weak inflation to lower fuel prices. Grocery prices continue to rise, but not as much as in the same month last year. Not only did overall inflation fall, but inflation excluding energy and food fell. Many experts consider so-called core inflation to be more meaningful than the overall rate.
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