18th July 2017

UK Inflation Rate drop

Inflation rates in Britain have dropped from 2.9% in May to 2.6% in June after a near four-year high.

Inflation had been rising sharply since last year’s Brexit vote, after a 13% drop in the pound in the aftermath of the referendum, which led to an increase in import prices.

Wages are only rising by 2% and are rising slower than the cost of living increase. Inflation has been higher than the average wage growth, meaning falling pay.

The main factor is the fall in fuel prices which dropped by 1.1$ between May and June 2017 and the annual price growth rate falling from 7.5% to 4.1%. On an annual basis, everything has become generally more expensive than the previous year. The second largest contributing factor was recreation and culture, followed by clothing, footwear and household services.

This drop in inflation rates has caused the pound to fall sharply against the dollar to $1.3021, down 0.38 cents. Similarly, it fell nearly a cent against the euro at 1.1293.

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