UK inflation rate expected to stay at 2% in June, with positive economic growth

From Morningstar: 2024-07-15 10:40:00

In June, the annual inflation rate in the UK is expected to stay at 2%. May saw a 2% increase in the Consumer Price Index. Morningstar DBRS cautioned against Labour’s economic plan, warning of risks and potential execution challenges.

Before the election, the UK GDP outperformed expectations with 0.9% growth in May. Positive economic growth and a new government boosted the pound in July, strengthening against the Euro and Dollar.

A stronger pound could alleviate inflation pressures in the UK, benefiting import-dependent countries. The Bank of England attributes high inflation to both global and domestic factors, reaching 11.1% peak in October 2022.

Core CPI, excluding volatile prices, stood at 3.5% in May and is expected to drop to 3.4% in June. Services inflation remains a concern for policymakers, hovering above 5%.

The Bank of England will meet on August 1, with financial markets speculating on the possibility of an interest rate cut. Economists suggest that a rate cut may be imminent to stimulate economic activity.



Read more at Morningstar: UK Inflation: What to Expect from June’s Data