Forex Pros – Consumer price inflation in the U.K. declined unexpectedly in June, easing off the highest level since September 2008, official data showed on Tuesday.
In a report, the U.K. Office for National Statistics said that the rate of consumer price inflation eased to 4.2% in June from 4.5% in May.
Analysts had expected U.K. consumer prices inflation to hold steady at 4.5%.
Month-over-month, consumer price inflation dipped 0.1%, confounding expectations for a 0.2% increase.
The rate of inflation was double the Bank of England’s 2.0% target. The BoE Governor is obliged to write to the Chancellor of the Exchequer every three months that inflation is more than a percentage point above or below its target.
Core CPI, which excludes food, energy, alcohol, and tobacco costs increased by a seasonally adjusted 2.8% in June, confounding expectations for a gain of 3.4%.
The retail price index rose 5.0% in June, after climbing 5.2% in the previous month. Analysts had expected the RPI to remain unchanged in June.
Following the release of that data, the pound was down against the U.S. dollar, with GBP/USD slumping 0.58% to trade at 1.5814.
Meanwhile, European stock markets were sharply lower. The FTSE 100 tumbled 1.55%, the EURO STOXX 50 plunged 1.95%, France’s CAC 40 plummeted 2.2%, while Germany’s DAX sank 2.1%.
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