Inflation will remain below target

– CPI inflation in June 2015 was 0.0%, down from 0.1% in the year to May

– Falls in clothing and food prices were the main contributors to the change in the rate, along with a smaller rise in air fares than a year ago.

– Inflation on goods in June 2015 was -2.0%, while inflation in services was up 2.2%.

Commenting on the CPI inflation figures for June 2015 published today by the ONS, David Kern, Chief Economist of the British Chambers of Commerce, said:

“The pattern of CPI inflation over the past few months supports our assessment that inflation is likely to remain around 0% over the next few months. Our forecast is that inflation will edge up gradually from the end of this year, but will remain below 2% until well into 2016. Low inflation is a welcome boost for households and businesses and will help to support the economic recovery.”

“The latest figures should help the Monetary Policy Committee to hold off on increasing interest rates until mid-2016 at the earliest. Keeping rates on hold will provide businesses with the stability they need to plan and invest without any unwelcome surprises.”

David Bharier, Business Insight Manager at the BCC said:

“The BCC’s Quarterly Economic Survey (QES)* for Q2 2015 has shown that a greater number of UK manufacturers expect their prices to rise compared to the previous quarter. By contrast, the service sector has seen a downward trend in the number of firms anticipating higher prices.”