UK Inflation returns to form After a very brief flirt with deflation in April – when it fell to minus 0.1% – UK inflation, as measured by the Consumer Prices Index (CPI), turned positive again in May, rising by 0.2% to plus 0.1%. In the official figures, released by The Office for National Statistics (ONS) in June, they cited several factors for this rise. The main culprit being the rise in air fares, as a direct result of the timing of Easter this year and increases in the oil price over the period, reversing the trend seen in April. However, there was also an increase seen in food prices across the country, although these are still lower than seen a year ago. Philip Gooding, the ONS Statistician, said of these figures: “Last month CPI turned negative, mainly because of falling transport fares due to the timing of Easter. This month, that fall has been reversed.” He went on to add that the overall fall in fuel and food cost seen over the year: “have eased this month, helping to push inflation up.” At the same time, the ONS announced that the Retail Prices Index (RPI), the wider inflation measure that includes housing costs, also rose from the 0.9% recorded in April to 1.0% in May. Mark Carney, the Governor of the Bank of England, who is ultimately responsible for managing the inflation rate, commented that he believes UK inflation will remain low in the short term and that he thinks the current near-zero rate will be a boon to the economy as a whole and help to improve the increasing spending power of households. Meanwhile, the Chancellor of the Exchequer, George Osborne, echoed this sentiment as he added: “a powerful mix of low prices and rising wages (was) good news for working people and family budgets.” He went on to say: “of course the job is not done and we will continue to remain vigilant to all risks, particularly when the global economic situation is so uncertain.”
Markets (June) (Data supplied by the Outsourced Marketing Department) With Greece finally defaulting on €1.5bn (£1.1bn) of its debt to the International Monetary Fund at midnight ( Athens time) on June 30th, and the likelihood of further defaults to follow from them, equity markets globally retreated. The FTSE100 dropped by 6.63% during June to end at 6,521.0, pushing its quarterly fall to 3. 8%. The wider F TSE250 also suffered, closing at 17,531.5 to record a 3.43% decline and the junior AIM market dipping by 2.19% to 755.68. The American markets followed suit as the Dow Jones lost 2.17% to 17,619.51, whilst the Nasdaq index closed June at 4,986.87, a drop of 2.18%. With the widely anticipated Greek default impacting the Eurozone heavily, the Eurostoxx50 suffered the largest falls of 4.1% as it closed at 3,424.3. It has now fallen for three consecutive months and lost 7.4% of value in the process. The Japanese market was more stoical with the Nikkei225 only losing 1.59% to 20,235.73, but ending its five month bull run seen since January. Again reflecting the negative Greek impact, the Euro currency fell to €1.41 against Sterling, a dip of 1.44%, but gained a little against the US Dollar at $1.11. Sterling improved by 3.29% against the greenback to end June at $1.57. Given that gold is usually in demand as a safe-haven investment in times of stress, it was strange that bullion was not in demand, as its price fell by $20.40 an ounce in June to $1,171.00.
Black gold – Oil, as measured by the Brent Crude benchmark, fell slightly in price to $63.59 a barrel. Although off 2.62% for 3 the month, rises earlier in Q2 left it 14.9% higher over the last three month period. Download full report here

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