LONDON, July 22 (Reuters) – Britain’s annual rate of consumer price inflation fell to 2.6% in June from 2.8% in May, official figures showed on Wednesday.
A Reuters poll of economists had shown a median forecast of 2.7% in June as a surge in energy prices caused by the Iran war eased off during the month when a ceasefire began.
The leap in energy costs has had a big impact on Britain due to its reliance on imported natural gas.
It has mostly been above the Bank of England’s 2% target over the past five years. The central bank has said it is likely to rise to 3% in the third quarter.
Investors expect the BoE to keep its benchmark interest rate at 3.75% next week as it continues to assess the impact of the Middle East conflict.
Some policymakers who voted to increase borrowing costs in June are worried about the risks of inflation persistently overshooting the 2% target.
Financial markets on Tuesday priced in one or possibly two quarter-point interest rate increases by the end of in 2026.
ONS data last week painted a slightly better picture of Britain’s economy in May, giving some relief to new Prime Minister Andy Burnham who took office on Monday.
Figures released on Tuesday showed signs of stabilisation in the labour market in recent months and weaker government borrowing in June.
(Reporting by Suban Abdulla; Editing by Muvija M)
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