Unexpected UK inflation fall takes markets by surprise 

There were more surprises for the markets, as unexpected UK inflation data results from the Office for National Statistics (ONS) showed that the rate of inflation in the UK has dropped from 2.9% in May to 2.6% in June.

Commenting on the figures, David Johnson, Director at currency specialist, Halo Financial (www.halofinancial.com) said, “The dip in inflation will be very much welcomed by the British cash strapped consumers, who have seen their living standards squeezed, as inflation climbs quicker than wages.”
This is the first time the inflation rate has decreased since October 2016.  Markets had expected the rate to remain the same or fall only very slightly. 

Contributing factors included another fall in fuel prices, which dropped again in June for the fourth consecutive month.  

“The cooling UK inflation data takes the pressure off the Bank of England to raise rates in 2017 to curb inflation; so we may therefore see a more accommodative stance from policymakers in this period of uncertainty,” said Johnson.


“Every political and economic announcement is having at least some effect on the Pound in the continually volatile currency markets, which are moving constantly, so individuals and businesses alike need to keep a close eye on the latest developments and their effects on exchange rates.”