The latest inflation data for June 2024 provides a detailed picture of price changes in the UK economy:

Overall Inflation Rates

1. CPIH (Consumer Prices Index including owner occupiers’ housing costs):
   • Annual Rate: Increased by 2.8% in the 12 months to June 2024, the same as the previous 12 months to May 2024.
   • Monthly Rate: Increased by 0.2% in June 2024, consistent with the increase in June 2023.
2. CPI (Consumer Prices Index):
   • Annual Rate: Increased by 2.0% in the 12 months to June 2024, maintaining the rate from the previous 12 months to May 2024.
   • Monthly Rate: Increased by 0.1% in June 2024, the same rate as in June 2023.

Key Contributors to Inflation Changes

• Restaurants and Hotels: The most significant upward pressure on both CPIH and CPI came from the prices of hotels, which rose more in June 2024 compared to a year ago.
• Clothing and Footwear: The largest downward pressure came from this sector, where prices of garments fell in June 2024, contrasting with a rise in prices in June 2023.

Core Inflation

Core inflation, which excludes volatile items such as energy, food, alcohol, and tobacco, provides a clearer view of underlying inflation trends.

1. Core CPIH:
   • Annual Rate: Increased by 4.2% in the 12 months to June 2024, the same rate as in May 2024.
   • Goods Annual Rate: Decreased from -1.3% to -1.4%.
   • Services Annual Rate: Increased from 5.9% to 6.0%.
2. Core CPI:
   • Annual Rate: Increased by 3.5% in the 12 months to June 2024, maintaining the same rate as in May 2024.
   • Goods Annual Rate: Decreased from -1.3% to -1.4%.
   • Services Annual Rate: Remained steady at 5.7%.

Analysis

• The stability in both the CPIH and CPI annual rates suggests that overall inflationary pressures have remained consistent over the past months.
• The rise in prices for hotels indicates increased demand or higher costs in the hospitality sector, contributing significantly to the monthly inflation figures.
• The decrease in clothing and footwear prices suggests a reduction in demand or increased competition in this sector.
• Core inflation figures, especially the high services inflation rate, indicate persistent underlying inflationary pressures, particularly in the service sector.

Overall, while the headline inflation rates have stabilized, the underlying core inflation remains high, particularly driven by services, which may signal ongoing inflationary pressures in the economy