UK inflation falls to 2.6%: What this means for you
The UK June 2017 inflation rate was 2.6%, according to official stats. That’s down from 2.9% in May – the first fall in consumer inflation since October 2016.
This means the inflation rate still stays above the Bank of England’s target of 2%. The UK economy is still growing and we’re not likely to see deflation any time. But the fall in inflation was a surprise and it means the UK economy is now growing more slowly.
So what does the June 2017 inflation rate mean for you? Does it mean more money in your pocket or less? Don’t worry – we’ll take you through everything you need to know.
Why is the June 2017 inflation rate down?
Up until June, inflation has been rising fairly consistently. A year ago, in June 2017, it was just 0.5%. That means that the June 2017 inflation rate is more than 2% higher than it was 12 months ago.
But in May 2017, the inflation rate was at 2.9% – meaning these new stats show that inflation has slowed slightly. So even though the UK economy is still growing, it’s not growing quite as quickly as it was last month.
The data from the Office for National Statistics (ONS) shows that the reason for the inflation rate fall is due to a drop in petrol prices. The cost of some recreational goods and services also fell in June 2017 – and this contributed to lower inflation too.
However, the price of furniture and household goods rose by 0.5%. This includes things like bedroom, kitchen and lounge furniture and it was one of the major things helping to keep inflation high.
How does this affect you?
Inflation means that the prices of everyday goods and services are rising. So a fall in the June 2017 inflation rate means that things aren’t getting quite as expensive as they were.
This is good news for consumers, particularly if you’re on a tight budget. It means that things should be getting slightly less expensive – so you shouldn’t have to make your money stretch quite as far.
But some economists are already predicting that the falling inflation rate is a blip. This could mean that we’ll see an increase in inflation again in July.
And as inflation is still above average wage rises at 2%, it means that UK consumers are still worse off. If you’ve got a low income, you might still struggle with rising prices.
One thing that the fall in the June 2017 inflation rate could mean is that the Bank of England is less likely to increase the base interest rate any time soon. This is good news if you’re a borrower as it means that loans and credit cards are likely to be cheaper. But it’s bad news if you’re a saver, as you won’t earn much interest for your savings.
Managing your budget when money’s tight can be tough. You can make things more affordable by cutting what you’re spending on groceries. Our blogs will help you find out where to shop on a budget and how you can save money on your supermarket shop.