Inflation falls, easing interest rate worries
Published On 17 July 2007
Fears that a further interest rate increase could be necessary to curb spending in the UK economy have been relieved after official data showed that inflation fell in June.The Office for National Statistics (ONS) revealed that consumer price index inflation (CPI) dipped to 2.4 per cent last month - 0.1 per cent down on May's figure.
This means that inflation is currently running at its lowest rate in 2007 and suggests that recent interest rate rises could have had their desired effect and slowed spending.
However, another inflationary measure, the retail price index (RPI), rose in June to 4.4 per cent.
A spokesperson from the ONS explained: "The main upward pressure came from mortgage interest payments - which are excluded from the CPI - with lenders passing on the remainder of this May's quarter point increase in the bank rate."
Falls in utility prices were largely responsible for the fall in CPI inflation, the spokesperson added.
These figures are likely to encourage people who feared that another interest rate rise would be deemed necessary to combat inflation.
