Inflation slips back to zero

CPI has been hovering around zero since February


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Inflation slipped back to zero last month amid a round of womenswear summer sales and as a run of falling food prices reached its longest stretch for 15 years.

The Consumer Price Index (CPI) measure of inflation slipped back from 0.1% in May, in line with City expectations.

CPI has been hovering around zero since February, providing an extra boost to households as wage increases accelerate. Latest pay data tomorrow is expected to show a further improvement.

The Bank of England expects CPI - which fell below zero in April for the first time in more than 50 years - to turn higher later this year as the effect of falling oil and food prices fades.

It has been no higher than zero since February.

Philip Gooding, from the Office for National Statistics (ONS), said: "Inflation has continued its pattern of recent months, when prices have been very little changed on the previous year.

"The headline rate for June has dropped very slightly on May, back to zero, thanks to small downwards effects from movements in clothing and food prices and air fares."

The figures showed that clothing and footwear prices fell 0.4% between May and June this year.

This was a smaller reduction than usually seen at this time of the year when retailers mark down their summer ranges.

But it compares with a blip in 2014 when prices rose by 0.6% over the month as the timing of sales was pushed back. The main downward effect on inflation from clothes was led by womenswear, the ONS said.

Meanwhile the price of food and non-alcoholic beverages fell 2.2% year-on-year, the twelfth month in a row of declines. This was the longest stretch of falls since 2000.

Petrol prices rose 1.1p a litre between May and June, a bigger rise than in the same period last year, but the cost of petrol is still 13.6p a litre lower than a year ago.

Air fare rises were smaller than in 2014, particularly on European routes.

Core inflation - excluding the volatile effects of energy, food, alcohol and tobacco - slipped back to 0.8%. The figure is the lowest since March 2001.

The overall effect of food and fuel on the headline figure was to pull CPI down by 0.6%.

Retail Price Index inflation, a separate measure which includes housing costs, was unchanged at 1% in June.

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