Inflation Surprise at 2.4 Per Cent: The Office for National Statistics has released inflation figures for June 2018 with headline CPI inflation holding firm at 2.4% pa yet the old measure of inflation, RPI, crept back up to 3.4% pa from its May level of 3.3% pa.
Inflation + Housing Costs CPIH
The Consumer Prices Index including owner occupiers’ housing costs 12-month inflation rate held at 2.3% pa. This is known as CPIH and a benchmark we believe that now includes owner occupier housing costs as mortgage interest rates are low. This is not CPI but CPIH.
Consumer Prices Inflation CPI
The Consumer Prices Index (CPI) held at 2.4% pa. This is a key Bank of England (BoE) number and relieves pressure on the Bank of England to increase interest rates.
Retails Prices Index (RPI) – the old measure of inflation
RPI crept back up from 3.3% pa to 3.4% pa. Although this is no longer an official 'National Statistic', it certainly gives an indication that the pound has weakened and there is slight movement in prices and whilst putting a tiny amount of pressure on the Bank of England to increase interest rates and strengthen the £ as imported food, goods and games price increases; we are perhaps not quite there yet.
We expact that a flat CPI and only marginal RPI increase will no doubt mean a weaker pound and will push stock markets up and indeed it has started just after the figures were released. On the counter argument, if interest rates do increase in August or September it will hit stock markets.