The UK’s inflation rate has remained unchanged at 2% in the year to June, meeting the Bank of England’s target, according to figures released by the Office for National Statistics (ONS) on Wednesday.
This development is said to pave the way for a potential interest rate cut next month.
“The measures announced in the King’s Speech to Parliament would take the brakes off Britain and create wealth for people up and down the country by spurring economic growth,” said Prime Minister Keir Starmer.
The ONS reported that the largest contributor to the annualised inflation rate was the restaurants and hotels sector, with some economists attributing the increase to Taylor Swift’s UK tour.
Meanwhile, clothing and footwear prices saw widespread sales, leading to a significant downward contribution.
While the flat reading was slightly higher than expected, financial markets anticipate a close call on whether the Bank of England would reduce its main interest rate from 5.25% on August 1.
Policymakers remained concerned about the pace of price rises in the services sector and wage increases, which could lead to an inflation rebound if interest rates are cut too soon.
Higher interest rates has helped ease inflation but have also weighed on the British economy, which has experienced minimal growth since the pandemic rebound.
The government’s upcoming plans, to be announced later on Wednesday, is aimed to boost economic growth and “take the brakes off Britain.”
AP
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