Investing.com - Inflation in the UK rose at a slower than expected rate in June, adding to the Bank of England's dilemma as it considers whether to raise interest rates next month.
The Office for National Statistics reported that the annual rate of inflation rose by 2.4% in June, matching May's figure which was a one-year low and falling short of expectations for an increase of 2.6%.
Underlying inflation rose by 1.9% on a year-over-year basis, slowing from 2.1% in the previous month and missing forecasts of 2.2%.
Consumer prices were flat for the month in June, down from 0.4% a month earlier and compared to forecasts of 0.2%.
The inflation figures came a day after data showing that wage growth in the UK slowed to its weakest rate in six months in the three months to May, despite record employment.
The steep drop in sterling in the wake of the June 2017 Brexit referendum drove up the cost of imports, leading to a spike in inflation. Although it has pulled back from its November peak of 3.1%, it is still running above the BoE’s target of 2%.
With inflation outstripping wage growth consumers are facing a cost of living squeeze, potentially making an August interest rate rise less likely.
The retail price index, published at the same time as the inflation data, ticked up to 3.4% from 3.3% year-on-year. The index is used to price some government debt.