UK inflation stays at 2.4% as stores discount clothing

Bloomberg

UK inflation unexpectedly held at 2.4 percent last month as cheaper clothing and computer games offset the rising cost of filling up a vehicle. The pound weakened as investors pared bets that the Bank of England will raise interest rates next month.
Consumer prices were unchanged from May, the Office for National Statistics said on Wednesday. Annual inflation was expected to accelerate to 2.6 percent, according to a Bloomberg survey of economists. Core inflation slowed to 1.9 percent, a 15-month low. Clothing and footwear prices fell by 2.1 percent between May and June, the biggest decline for the month since 2012, with the ONS reporting a greater incidence of discounting. There was also downward pressure from computer games, toys and hobbies.
These effects were partly offset by auto fuel as the costing of filling up rose by 2.2 percent.

Petroleum prices climbed by 2.7 pence per liter to 128 pence and the cost of diesel advanced by 2.9 pence to 132.1 pence, both the highest since September 2014.
Upward pressure also came from electricity and gas prices after suppliers including British Gas, EDF and Scottish Power increased their tariffs in response to higher wholesales costs.
BOE Decision
The figures represent the last take on inflation before BOE policy makers decide whether to raise interest rates on Aug. 2. While a hike is widely expected in financial markets, inflation last month was below the 2.5 percent forecast by the BOE in May.
The pound fell after the data and was 0.8 percent lower at $1.3016 as of 9:32 a.m. London time. Investors cut the probability of an August rate rise to 73 percent from 84 percent on Tuesday.
Separate figures showed producer input prices rose 0.2 percent, taking the annual rate of increase to 10.2 percent.
Factories, however, have chosen to absorb much of the pressure rather than pass it on to consumers with output prices rising 3.1 percent on the year.
House prices rose 3 percent in May from a year earlier, the slowest rate since August 2013. The worst-performing region was London, where prices fell 0.4 percent as Brexit fears and stretched affordability sapped demand.